The head of Britain’s largest business lobby has warned Chancellor Jeremy Hunt that he risks forcing Britain’s businesses to ‘hibernate’ and curbing business investment if the Autumn Declaration fails to include reforms to boost economic growth.
Tony Danker, chief executive officer of CBI, told the Financial Times he had spoken to numerous companies about their plans in recent weeks and it was clear that Hunt’s statement on Thursday would be crucial for many of them in deciding whether to move into Britain would invest or withdraw from the country.
Danker said Hunt cannot simply talk about economic growth in the statement, adding the CBI is seeking a range of supply-side reforms, including measures to address labor shortages.
And with the government raising corporate income tax from 19 percent to 25 percent next April, the CBI wants ministers to give allowances to companies to encourage business investment.
Danker said it was “mandatory” for Rishi Sunak, the prime minister, and Hunt to make “tough decisions” for economic growth.
But he expressed concern: “They won’t do that. . . and we will regret that, because over the next few weeks it will trigger a series of corporate decisions that are almost tantamount to hibernation. . . that they will withdraw from investing in Britain”.
Danker said many companies are finalizing their 2023 budgets this month with two scenarios: one with plans for investing and growth, and another reflecting a “doomsday” recession outlook.
“The government must be careful on Thursday that we don’t tip confidence in the wrong direction,” he said. “It’s a real risk.”
Danker said some multinationals were already opting to shift investment out of the UK after Liz Truss’ disastrous ‘mini’ budget caused £45bn in damage to unfunded tax cuts in September.
He also said there needs to be regulatory reform to make economic growth a priority, but added the government is still too “fixated on repealing EU law and not on what’s constraining growth”.
“A political exercise to repeal EU law does not help,” he said, referring to the government’s legislation to review and repeal EU law.
Though Danker said he was one of the first CBI directors-general not to call for sweeping corporate tax cuts, he added that the government “needs to be careful.”
He said the government should try to ease the burden of corporate taxes, which will add an additional $3 billion to businesses in April.
Danker warned that this would result in lower investment and closures on the high street.
The Treasury responded: “Tough decisions will be needed to restore confidence and economic stability, which will help balance the books, reduce debt and bring inflation under control.” This is the only way to achieve sustainable growth in the long term.
“The November 17 autumn statement will set out our plans to boost growth,” it said, “building on the UK’s globally competitive corporate tax rate and the UK’s investment incentives.”
https://www.ft.com/content/472d0d6c-cc16-4ed2-b112-3ddaa427602c CBI Calls for Reforms to Stimulate Growth in Fall Statement