The annual Budget is always a challenging affair for the UK’s Chancellor of the Exchequer but, this year, the commentators really piled on the hyperbole: Mr Hammond apparently faced “colossal pressure”, with senior colleagues – including the Prime Minister – reported to be concerned by “the worst Budget build-up in history”. In truth, everyone knew that there was little that the UK’s Finance Minister could do – with mostly bad economic news to deliver, almost unprecedented levels of uncertainty, and no guarantee that a rebellion in his own party wouldn’t force an embarrassing U-turn, he had to play it safe.

Predictably, therefore, Wednesday’s speech – although mildly entertaining – included few headline-grabbing surprises. A tax cut for first-time homebuyers, some more money for the national health service, and a £3 billion (€3.4bn or $4bn) Brexit fund (“to prepare for every possible outcome”) were among the most noteworthy announcements. Whether Mr Hammond has done enough to save himself from his colleagues remains an open question, but many in the business community approved of his business-like approach and long-term investment pledges.

That positive reception was particularly evident in the private equity and venture capital sector. The BVCA quickly welcomed an “imaginative package” of measures to fund the companies and sectors of the future that “could have a transformative impact”.

In the main, those measures were contained in a series of announcements emerging from the “Patient Capital Review” launched earlier this year. The most eye-catching was a new investment fund, to be incubated by the British Business Bank (BBB) and seeded with £2.5 billion of public money. This fund will co-invest with the private sector to unlock £7.5 billion, will invest on market terms and seek commercial returns, and will be floated or sold once it has established a track record. This would appear to be a new incarnation of the existing VC catalyst fund, whose focus is on later stage venture and growth capital funds. The signal this gives about the government’s commitment to backing venture capital is very promising, and may present a further opportunity for the industry to help shape the fund’s future.

The Chancellor also pledged more money, over a 10 year period, to the long-established, and very successful, Enterprise Capital Fund programme for emerging venture capital fund managers, and will also invest, via the BBB, in a series of private sector funds-of-funds (and will launch a request for proposals from fund managers soon). A feasibility study will consider how Britain could emulate the U.S.’s Small Business Investment Company (SBIC) programme, and initiatives will be launched to encourage foreign investment into UK venture funds. At the same time, various proposals to channel more pension fund investment into illiquid, long-term investments are being considered.

The government might have been expected to say more about how it will plug any hole left by the European Investment Fund (EIF) if it stops investing in UK funds. But, in fact, the government confirmed that it wants to negotiate a continuing relationship with the EIF, and says that it is too early to set out what will happen if that doesn’t work. That is a shame, because some clear contingency plan might have offered more certainty to funds planning their next fundraising – but, in fact, the measures announced this week do represent some thinly disguised contingency planning, and the government says that existing programmes will be “re-configured” if a mutually beneficial relationship with the EIF cannot be agreed.

And, in a welcome sign that the UK government remains keen to nurture its (very valuable) asset management industry, the Chancellor is working on a new long-term strategy for the sector. It is not clear what specific measures will be included in the plan, but it will be developed and implemented “in close collaboration with the industry”.

But, inevitably, the news was not all good. As well as some very gloomy economic forecasts, there were some less welcome announcements that will affect buyout, real estate and venture capital firms (among others). These included tweaks to the carried interest rules, and proposals to tax gains made on real estate investment by non-UK residents. They were less conspicuous, but they may mean higher tax bills for some. Our summary of those is included in a separate note, which can be accessed here.