CBI calls for March budget to boost economic growth
The CBI has called on the Chancellor to focus his March Budget on areas that do most to boost economic growth and job creation.
In a letter to George Osborne, the CBI outlines its priorities for the Government’s Growth Review, alongside broader measures to enhance competitiveness. It is calling on the Government to focus on three critical areas: boosting export performance, unleashing domestic investment spending, and removing barriers for high-growth firms.
The CBI’s proposals include: creating a new corporate bond market for mid-caps to increase the supply of capital; speeding up the planning system to stimulate infrastructure investment and encouraging companies to become more energy efficient by restoring the incentive element of the Carbon Reduction Commitment.
The Budget must also address areas of taxation, which are discouraging entrepreneurship and undermining UK competiveness, including the 50p personal tax rate and the narrow definition of business assets under Capital Gains Tax.
John Cridland, CBI Director-General, said: “This Budget must demonstrate a relentless focus on growth to help get the UK working again. We need an all-action Budget which boosts exports, investment and jobs.
“The Budget should create the framework for a Mittelstand of mid-cap businesses by ensuring they can access the capital they need to expand at home and abroad.
“Mobile talent needs a good reason to do business in the UK, so the Chancellor should signal a road map for reducing the 50p tax rate.
“The incentive behind the Carbon Reduction Commitment must be restored to help companies go green, and if not, it should be stopped altogether because in its current form it adds yet another cost to doing business.
“And we want to hear more about how the planning system will genuinely deliver swift decisions on infrastructure, and less about abolishing the Infrastructure Planning Commission.”
Other measures the CBI says will boost exports and investment are: strengthening UKTI to provide more targeted support for exporters; improving the Enterprise Investment Scheme (EIS) to bridge the funding gap for larger SMEs, and ensuring the extra support announced through the Export Credits Guarantee Department (ECGD) reaches the firms it is aimed at.
To help firms get on with growing their businesses and creating jobs, the CBI is calling for changes to regulations that are hampering firms. These include: restoring the two year unfair dismissal qualifying period to give companies more time to assess the potential of a new employee, thereby giving firms the confidence to hire new staff without the threat of a tribunal if it doesn’t work out. In addition, the tribunals system should be strengthened to weed out weak and vexatious claims.
Although oil prices and related world events are outside the UK’s control, the CBI also warns that an above-inflation rise in fuel duties would make a difficult situation worse.
Ian McCafferty, CBI Chief Economic Adviser, added: “The Government has been right to stay the course on its fiscal consolidation plans to bring the current budget deficit back to balance by 2015.
“As spending cuts put household spending under ever greater pressure, the Budget must create the right conditions for businesses to invest and grow. Given that much more growth will have to come from exports and corporate investment, the role of UKTI in helping firms exploit overseas opportunities will be crucial.
“In addition, public service reform needs to be more than simply taking the easy option of reducing headcount and cutting frontline services. Less money should not equate to a poorer-quality service.”
