Business calls for a post austerity Budget.

Business Insights
18/10/2017

The CBI is calling for a budget that will help businesses grow the economy, in its submission to the Chancellor of the Exchequer the organisation has set out a series of measures designed to bring the UK’s new Industrial Strategy to life.


The organisation sees the Budget as an opportunity for the Government 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.


Against the current 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. .


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 Carolyn 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.


“Infrastructure improvements will help to tackle regional inequalities, so action to address delays in road, rail and aviation requires urgent attention. A strong pipeline of projects exists – but we need to move faster to get things moving on a clear and deliverable timescale.


“Fixing the foundations of the economy at home will help protect jobs, increase wages and living standards against the backdrop of uncertain UK/EU talks.”


Carolyn continued, “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.


The organisation calls for an increased focus on investment in R & D and recommends setting an interim target for public investment in R&D by the end of this parliament as part of commitment for R&D spending to equal 2.4% of GDP by 2027


To achieve the target it is suggested an increase in grant funding through Innovate UK, which should focus on ‘crowding-in’ business investment via collaborative R&D and continued support for catapult centres. An increase in support for pilot schemes to improve the adoption of tried and tested technologies and management practices to improve productivity.


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