Rishi Sunak must make it easier for businesses to invest to stave off a looming recession, bosses have warned.
The Confederation of British Industry (CBI) is urging the Chancellor to cut taxes on company spending to help prop up the economy.
Without action, the CBI said, the UK faced an ‘incredibly bad’ slump that would lead to unemployment and a further fall in living standards.
Concern: The Confederation of British Industry is urging the Chancellor to cut taxes on company spending to help prop up the economy
Its warning came as it slashed its growth expectations for the economy amid red-hot inflation fuelled by the war in Ukraine and Covid hold-ups.
It expects the UK to grow by 3.7 per cent this year, down from 5.1 per cent previously, and by 1 per cent next year – down from 3 per cent. But the Organisation for Economic Co-operation and Development (OECD) predicts it will stagnate next year, with no growth at all.
CBI chief economist Rain Newton-Smith said: ‘This is a tough set of statistics. The bottom line is that the outlook for exports remains far worse than our worldwide competitors. This has got to change.’ Director-general Tony Danker said a recession may be avoided because temporary tax cuts are letting firms invest in growth and operations.
To see this momentum continue, Sunak must make these tax cuts permanent, Danker said, and bring in other schemes to boost confidence.
He claimed global firms were ‘shorting’ the UK, adding: ‘They see some of these Brexit worries, some of these OECD figures, and they’re thinking the UK is not a good place to invest. We can change this. We have a window of opportunity.’
The CBI is calling for a permanent ‘super-deduction’ – a measure brought in last year to let firms cut their tax bill by up to 25p for every £1 they invest in plant and machinery.
Ministers should also cut approval for offshore wind farms from four years to one, and admit migrants for industries that are struggling to find workers. Danker also said the rise in corporation tax next year, from 19 per cent to 25 per cent, would be another blow to business.
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