CBI CEO Rain Newton-Smith has warned that the latest UK budget has spelt bad news for businesses and growth.

In a speech at the organisation’s annual conference she warned  “margins are being squeezed and profits are being hit” and when you “hit profits, you hit competitiveness, you hit investment, you hit growth.”

In her first major speech since the Autumn Budget, Newton-Smith said the government should be recognised for “drawing the curtain on a near decade of instability” but urged them to shift from consultation to co-design.

Newton-Smith said the CBI’s post-Budget survey revealed that nearly two-thirds of firms reported that the Budget will damage UK investment with half of firms looking to reduce headcount as a result. Calling for closer collaboration between firms and government, she warned that “tax rises like this must never again simply be done to business.”

Newton-Smith praised the government for action in areas where they have drawn on the insight of business, citing the business tax roadmap as an example, but called for an “elevated partnership for a higher purpose” to deliver on the government’s growth ambitions.

Launching the CBI’s new Blueprint for Competitiveness, a policy framework for enhancing the UK’s competitiveness against a shifting global landscape, Newton-Smith will highlight the importance of “public-private partnerships built for success” as holding the key for “transforming economic challenges into opportunities for sustained growth.”

Newton-Smith said that partnership must be put into action in three key areas to turbocharge the UK’s growth prospects:

• Action on the pressing challenges facing business, including a faster more transformative timetable for business rates reform, flexibility on the apprenticeship levy, and boosting occupational health incentives to support the health of the workforce.
• Build for the long-term by using the Industrial Strategy to mobilise the “everyday economy” behind the races the UK can win, through strategic use of the UK’s national assets, its diverse industrial base and capital markets; an international outlook; and a strong focus on skills at its core, as set out in the CBI’s new Blueprint for Competitiveness.
• Pull key growth levers to get the economy moving, by going further on tech adoption, planning reform, and regulation.

Newton-Smith explained:  “Right now, we – this country, this government, this room of brilliant business leaders, we are standing on a shoreline. And in the distance, there’s an island: a vision of growth. The real, long-term sustainable growth that we so badly need.

“It’s a vision we all share. It’s a vision the Prime Minister and Chancellor have set out with strength and determination. It’s a vision we in business feel down to our very bones.

“But what we must all understand… is that there is only one force that can bridge that gap. Only one force that can make that vision a reality. That’s the people in this room.  It’s the ingenuity, the ideas and the investment of business.

“Business is the innovative power in the UK. All of industry, corporations, further education, our great universities. You are the true engine of sustainable growth. The ones who are quietly creating jobs, opportunities, and better quality of life in your communities.”

She continued: “But it’s been a tough few years and often the ingenuity of industry has been spent just fighting fires. Boardrooms have been crying out for stability, optimism and the possibility of thinking for the long-term again.

“That’s what we’ve been pressing this government for. Be bold, be brave, give hope and have confidence.

“And we saw the Chancellor deliver on that in part – with stability in our public finances, with the brave decision to create space in our fiscal rules for capital spending. And the corporate tax roadmap we called for, to give business certainty for the long-term.”

On the importance of a profitable UK plc, Newton-Smith said:  “Profit’s not a bad word. But the challenge for all of us is when we look out across the water to our island of growth.

“When we look at OBR forecasts for just 1.5 per cent growth by the end of this Parliament. That island we’re reaching for is still a long way off.

“That’s because stability is a precondition, not a blueprint, for growth. The missing piece – the steel supports that hold the whole bridge up – that’s investment.

“Above all, it’s corporate Britain. Because vital as they are for employment, for every £1 an SME invests, larger firms invest £500. What really defines growth – is the decisions made in boardrooms up and down the country.

“It’s CFOs and CEOs asking: can we afford to invest? Can we afford to expand? Can we afford to take a chance on new people? Well after the Budget, the answer we’re hearing from so many firms is still – not yet.

“The rise in National Insurance and the stark lowering of the threshold, caught us all off guard.

“Set alongside the expansion and rise of the National Living Wage – which everyone wants to accommodate – and the potential cost of the Employment Rights Bill changes… they put a heavy burden on business.

“When firms I speak to want to be creating more opportunities, more investment, more training in their local communities…instead so many – especially in retail and hospitality – have gone into crisis containment.

“Even where the risk isn’t critical, firms that have been through really tough years are now in damage control again.

“They are looking with heavy hearts to cut training and investment, delay decarbonisation projects, or pass on costs to customers.”