With just weeks until the UK Budget, the CBI is urging the Chancellor to make the bold decisions necessary to get the economy firing.
Businesses will judge the Budget a success or failure based on its ability to inject immediate momentum into a stuttering economy, and whether it gives firms and consumers confidence that the government has prioritised long-term prosperity over short-term thinking.
Every decision made this month must be taken in the interests of the UK’s growth mission, with action firmly focused on reform, simplification and alignment of incentives to boost business investment and job creation.
The CBI has identified some immediate steps the Chancellor can take to chart a decisive path back to sustained growth in its latest Budget submission – with a focus on fast-tracking infrastructure, boosting competitiveness, upskilling our workforce and adopting technology and innovation.
The government must also show it is ready to make the strategic decisions needed to take the country forward.
That means accepting that hard choices must be made – without leaving the door ajar to further unwelcome tax changes in Spring. ‘Death by a thousand taxes’ is not a credible way to deliver a thriving, prosperous economy.
With business tax at a 25-year high, firms are clear that they cannot endure a repeat of last year’s cost raising Budget. The Chancellor has to be prepared to challenge party orthodoxy and take difficult decisions to deliver the long-term stability and growth the country needs. Given the urgency of the situation, nothing can be considered ‘off-the-table’ – including unpopular moves in areas like personal tax, public spending, welfare provision and pension increases.
Rain Newton-Smith, CBI Chief Executive, said, “The government deserves huge credit for recognising the challenges faced by the economy and for showing determination to chart a course towards renewal that prioritises both public and private investment. But the goal of a growing economy that raises living standards across the board won’t be achieved until real fiscal headroom is created and the cycle of short-term thinking that’s holding the country back is broken.
“Yearly tinkering to close an ever-increasing fiscal gap simply isn’t a viable approach to a challenge this big. We need to take tough decisions now or risk a downward spiral that sees us robbing Peter to pay Paul just to fund normal government expenditure and puts our growth prospects in peril. Short-term thinking leads to long-term decline, let’s not make that a political choice we live to regret.
“Sticking rigidly to manifesto commitments may be politically laudable, but its only economically viable if material conditions remain unchanged. The fact is they are not. Tax rises and spending cuts are unpopular, but the reality is that the Chancellor faces little choice. We need to make sure that these measures are fair, broad-based and have a laser-like focus on raising investment, growth and productivity for the long term.”
The private sector stands ready to play its part in the growth mission through increased investment, innovation and job creation. But battles against rising costs, overreaching regulation and short-term thinking have left their hands tied, with business confidence and investment stalling as a result.
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