Setting a path to sustainable change is the way forward

BUSINESSES of all sizes and sectors are pinning their hopes on a ‘bold’ Spring Budget to supercharge 2024.

With a forthcoming General Election, this is potentially the Chancellor’s last chance to deliver effective policies that will move the dial to achieve sustainable, long-term growth. But, with political stakes as high as they are, we run the risk instead of being presented with ill-costed, short-term election giveaways.

2024 is a critical year for business. Investment is set to fall by 5% while costs will spiral higher as Business Rates and the National Living Wage uplifts kick in.

Economic headwinds continue to take their toll with sluggish growth and challenging demand conditions.

Setting a path for sustainable change is the only way forward. A path that avoids persistently high inflation, builds resilience in the economy and mitigates climate change. Above all else, sustainable growth requires investment in people’s skills, in infrastructure and in developing a willingness to embrace technology.

The CBI is recommending an ambitious policy agenda with innovation at its heart, to fire up the economy. Investing in the UK’s high-growth industries from the green sector, digital and life sciences to manufacturing will cement our global reputation for excellence in technology.

We can do this by offering a world-beating support system that extends capital expenditure to Research & Development and establishing a Net Zero Investment Plan to incentivise green investment.

A concern for firms is skills and labour shortages, a long-standing drag on growth and balance sheets. Expanding non-taxable health support for employees and delivering the planned expansion of eligibility to 30 hours of funded childcare would drive workforce participation, enabling business to invest and expand.

Let’s also remove barriers to growth. Capping the business rates multiplier for another year and extending full expensing to cover rented and leased assets will help alleviate the pressure of operating in a high-cost business environment.

At the same time policies cannot come at the expense of economic stability.

While CPI inflation has fallen, and is expected to decline further over the course of 2024, it currently remains double the Bank of England’s 2% target.

The Budget must build on economic momentum, while maintaining hardearned credibility. The excited chatter about fiscal headroom for tax cuts should be balanced against the unquestionable necessity for an environment of certainty and confidence for business.

The IMF’s warning last week against tax cuts shows we have to be pragmatic about the nation’s finances. Preserving public services and raising living standards can only come to fruition with a realistic program of spending and tax cuts.

As political parties begin to set out their manifestoes, we urge them to bring a vision for growth for the next decade and beyond to the table.