Time to grow our way out of Austerity

phillip hammond

The UK needs a Budget that will enable the country to grow its way out of austerity, the CBI has said in its submission to the Chancellor of the Exchequer.

Faced with generation-defining challenges, this Budget should send signals that the UK is open for business and committed to supporting entrepreneurs and ambitious firms to thrive in all parts of the UK.

The CBI says the Government’s Budget is an opportunity to back the basics of a strong market economy and show how good government in partnership with responsible business can improve lives, regardless of the outcome of the Brexit talks.

In its pre-Budget letter to the Chancellor, the CBI sets out a series of measures aimed at bringing the UK’s new Industrial Strategy to life through concrete action, as a means of reinforcing the UK economy against future challenges.

Carolyn Fairbairn, the CBI’s Director-General, urges the Government to get on with doing what it has promised – greenlighting large and small infrastructure projects, implementing the ground-breaking T-Levels programme and providing practical support for innovators.

Against the backdrop of subdued investment, business leaders need a stable, pro-enterprise environment. Top priorities are: improving education, fuelling inward investment in energy and infrastructure, spurring innovation and promoting competitiveness through the tax system. New measures should build on what has been started.

Carolyn Fairbairn, CBI Director-General, said: “Brexit planning must not be allowed to crowd out vital action at home. With this Budget, the Government needs to set its eyes on the horizon, not the next few yards. The only sure way to raise living standards and provide sustainable public services is to solve the UK’s productivity problem. This means tackling the weak foundations of our economy with consistency and determination.”

Business priorities in the CBI’s Budget submission include:

  • Communicate a clear plan on the Government’s Industrial Strategy with a timetable for the consultations promised in the Industrial Strategy green paper
  • Protect per pupil funding in real terms for this parliament and replenish schools’ capital budgets to support investment in long-term growth
  • Commit to fast delivery of planned infrastructure projects within the current road and rail investment pipelines, with clear timeframes and implementation plans including investment in ultra-fast digital networks
  • Ensure business rates incentivise productive investment – especially from our manufacturers – by exempting new plant and machinery investments from rates bills and bringing forward the RPI to CPI switch
  • Set out a pathway to reach an investment target of 2.4% of GDP on R&D by 2027 and increase Innovate UK’s funding for collaborative R&D.

The CBI is also asking the Chancellor to provide government departments with resources to make a success of Brexit, and set out a vision for tax policy that enhances the attractiveness of the UK as a place to do business.

Introducing the CBI’s Budget submission Fairbairn said: “The UK is facing the most complex challenge of the post-war period in leaving the EU, particularly at a time when the UK economy has gone from the fastest growing in the G7 to the slowest. The UK needs a Budget that will enable the UK to grow its way out of austerity.

“Faltering consumer and business confidence risks lowering living standards, so it’s important the Government sends firms the right signals they need to continue investing and growing.

“Ministers need to build on the basics to get our economy in shape for the challenges ahead by committing to a pro-enterprise environment and maintaining a relentless focus on the drivers of productivity.

“It’s critical the Budget ensures growth reaches all parts of the UK. A bold Industrial Strategy, with a clear delivery timetable and measurable progress is needed to eradicate differences in living standards around the UK.

“Amid heightened economic uncertainty, the focus must be on incentives to invest today, not postpone until tomorrow. To unlock investment in the UK’s factories and high streets, business rates should be aligned quicker with CPI not RPI and equipment investment excluded.

“Ultimately, building a more prosperous and fairer society requires a relentless commitment to pursuing productivity improvements.”