As UK chancellor Rishi Sunak pledged tax cuts in the Autumn budget statement the president of the country’s biggest business group warned more needs to be done if companies are to play their part.
In a speech to the CBI’s Annual Dinner Sunak warned of storms ahead adding companies need to move the country away from the brink of recession.
He urged businesses to “invest, train and innovate more” to help boost productivity and improve the long-term prosperity of the UK.
Sunak added the economy faced a “perfect storm” of supply shocks, warning that “the next few months will be tough”.
“In the autumn Budget we will cut your taxes to encourage you to do all those things,” he said. “That is the path to higher productivity, higher living standards, and a more prosperous and secure future.
However CBI president, Lord Karan Bilimoria (pic) replied that the government must act on the cost-of-living crisis and help firms to invest in uncertain times.
“Since the pandemic our recovery has been febrile, with supply chain challenges and labour shortages. Energy prices have gone up 4 times or 500% in a year, the costs of materials and shipping have gone up by 20%,” he said. “On top of that we’re dealing with eye-watering inflation.
“There is a genuine and real cost of living crisis squeezing firms, communities and people across the UK. I am worried that having the highest tax burden in 70 years at this time will stifle our recovery and growth. Businesses are doing their level best to ease the pressure wherever they can for their employees and consumers, but firms are faced with collapse unless they cut costs and put-up prices.”
Bilimoria added: “We need to work together to increase confidence and keep investment flowing. We cannot wait until the autumn to turn the page on low growth, we need to make our plays now.
“The Spring Statement began to ease some of these pressures, but prices remain very high. Your extension of the Energy Intensive Industries Compensation Scheme will also provide vital support for the hardest hit firms.
“We believe Government could build on this by extending and broadening the Recovery Loan Scheme. And eventually creating a long-term replacement.”
He added the country needed to place it bets for future success now.
“If we’re to truly do all we can to help businesses through this crisis we have to bet even bigger on growth. Business recognises money is tight. But ahead of the autumn Budget, we’ve identified three further bets the Government can make to bolster investment and confidence right now.
“First, let’s get public investment already committed out the door, to accelerate business action. One of the Chancellor’s strokes of genius during the pandemic was the Super Deduction. But it is currently due to be withdrawn in April 2023. The introduction of a permanent successor scheme is of the utmost importance. So, Chancellor, we’re looking forward to working with you and your team on this over the summer
“Second, let’s reassure firms the UK remains one of the best places in the world to do business by regulating for innovation and growth. For instance, by publishing the long-awaited digital strategy
“Third, let’s help strengthen the UK’s lead in the growth markets of the future. For example, in decarbonisation, where we can accelerate our transition to a net zero UK and drive green growth by detailing the investment models for emerging green tech such as Carbon Capture Usage and Storage (CCUS) and hydrogen and by investing in green finance and the green industrial revolution. And we must also leverage North Sea production as the UK transitions. Because getting to net zero is not an on-off switch. It is a transition.”
On business and government working together, Lord Bilimoria added: “From the tragic war in Ukraine to the aftershocks of the pandemic, we have seen an unprecedented two years. Working closely with the CBI, the Chancellor delivered one of the largest pandemic-support packages in the world, protecting countless jobs, firms and communities. Just like the pandemic we’ll need to once again work together to help ease the pressures on businesses and communities across the UK.
“We must now not step back or divert our course, but double down on our growth ambitions. We here have a shared vision of what this country can become: a truly high-growth, enterprising and competitive economy that works for all our firms and people. And businesses stand ready and willing to work with the Chancellor to make that vision a reality.”