Bosses warn Reeves against ‘stop-start economy’
The boss of one of the UK’s largest industry groups has called on Chancellor Rachel Reeves to avoid taking measures that lock in the country’s “stop-start economy” in a pre-Budget speech ratcheting up pressure on the government to unleash growth.
In a landmark speech on Monday, Rain Newton-Smith, the chief executive of the Confederation of British Industry (CBI), said Reeves should “make hard choices” at the Budget to lower energy costs for businesses and take a stronger stance on boosting output across the private sector.
Newton-Smith also sent a final warning to the government on its Employment Rights Bill as she urged the government to find a “compromise” between company directors and union bosses’ demands.
She told Westminster officials: “If growth is your priority, prove it – make hard choices for it.
“Be it welfare, be it pensions increases, show the markets you mean business.
“All short-term politics leads to is long-term decline. This country cannot afford another decade of stagnation.”
Newton-Smith highlighted the need for a larger headroom and broad-based tax measures to fill a fiscal hole rather than “death by a thousand taxes”. She added that “stability” was the “road to rowth” in the UK economy.
She also said the lead-up to Budget felt like “we’re stuck in Groundhog Day” given fresh tax rumours have come back to bite a year after Reeves said she would not taxing businesses again after last year’s fiscal announcement.
“This Budget is about credibility and about trust. You will never be able to tax your way to growth.
“Growth, not taxes, is the only way out of decline, and that starts with business.”
Reeves told to boost economic security
In a wish list of measures it wanted to see at the Budget, the CBI said pro-growth options on fast-tracking big infrastructure projects, making the growth and skills levy more flexible and focusing on tax arrangements for capital markets could boost the UK economy.
She credited the government for its commitment to boost capital spending and cut red tape but said the government now “faced a fork in the road” over whether it would follow through with plans and avoid further tax rises in the next few years.
The CBI’s conference on Monday is also featuring speeches from Tory leader Kemi Badenoch and business secretary Peter Kyle.
It will represent the last set of lobbying efforts from businesses as Reeves and her team put the final touches on the upcoming Budget.
The Business and Trade Committee also made a final pre-Budget warning on the UK economy’s security risks.
It said a new bill should be introduced to ensure UK economic security is consolidated, weeks after a cyber attack on Jaguar Land Rover held back growth across the country.
The new report said the UK had fewer economic defences than the likes of the US and the European Union despite having higher levels of foreign ownership.
Liam Byrne, chair of the committee said the government should ensure a new doctrine is introduced to ensure business and public sector bodies defend national infrastructure, diversify supply chains and develop sovereign capabilities.