Budget must help economy against future challenges
TALK of “deadlock” following last week’s talks will have given many pause for thought over the weekend. While the EU negotiation is the most complex undertaking of the postwar period, we can’t afford to neglect the other challenges facing the UK economy.
In a little over a year, our economy has gone from the fastest growing in the G7 to the slowest, and the IMF’s recent downgrade has added to existing woes over poor productivity.
That’s why this Budget offers the Chancellor an opportunity to set out how good government, working with responsible business, can help improve people’s lives.
So, when the Chancellor opens his Red Box in a few weeks’ time, business leaders will be looking for measures to create a pro-enterprise environment – delivered through a new, bold Industrial Strategy – to help reinforce the UK economy against future challenges.
Moreover, it’s critical that growth reaches all parts of the UK. Businesses welcomed the introduction of the Industrial Strategy Challenge Fund announced by the Prime Minister at the CBI’s Annual Conference last year.
At Autumn Budget, the UK Government must ensure that the process for deciding what challenges are set is broad and inclusive, establishing clear, transparent criteria on how future challenges within the Industrial Strategy Challenge Fund will be determined.
The UK Government should also ensure the Industrial Strategy Challenge Fund applies to a broad range of businesses. The challenges set should cover a broad range of sectors and technologies, and funding calls should be open to businesses of all sizes.
Looking at the breadth of challenges, the UK Government should take a portfolio approach to risk and include some higher risk, higher reward projects with the potential to deliver higher economic and social impact.
The CBI welcomes the UK Conservative Party’s manifesto commitment to replace EU funds for poorer parts of the UK through the Shared Prosperity Fund. Government should work with businesses and devolved governments to ensure this fund is well designed, easy to access and supports business growth and innovation.
For too long, the complexities of Brexit have crowded out domestic priorities, such as improving education, fuelling inward investment in energy and infrastructure, incentivising innovation and promoting competitiveness through the tax system.
Put simply, the only sure way to raise living standards and provide the sustainable public services we need is to solve the UK’s productivity problem.
Businesses are highlighting that the relationship they have with tax authorities can have a significant impact on where they decide to invest. Working on a real-time basis and providing businesses with greater clarity over their tax affairs will enhance the competitiveness of the UK’s business environment.
It will help to drive greater efficiency in interactions with HMRC so that the right amount of tax is paid at the right time and businesses can get on with doing business.
Amid heightened political uncertainty – both at home and abroad – British businesses crave stability to help them invest and grow over the long term. The recent energy cap announcement shows that misguided market interventions can be detrimental to the long-term goal of attracting muchneeded investment.
Therefore, the Chancellor should set a high bar for tax changes, focusing on targeted measures to incentivise investment and productivity growth.
Britain’s economy also needs to be match-fit for the future. Unlocking public and private investment in R&D to catch up with our international peers will be vital if the UK wants to be among the leaders of the technological revolution.
Only by setting out a vision for the economy that invites investment by shoring up business confidence, and addresses productivity problems, will the Government achieve its aim of sharing prosperity and opportunity more equally around the UK.