The head of the UK’s largest business lobby group has warned chancellor Jeremy Hunt that he risks pushing corporate Britain into “hibernation” and curbing business investment if the Autumn Statement does not include reforms to nurture economic growth.
Tony Danker, CBI director-general, told the Financial Times he had spoken to scores of companies in the past few weeks about their plans, and was clear Hunt’s statement on Thursday would be key for many of them in deciding whether to invest in the UK or retreat from the country.
Danker said Hunt could not simply talk about economic growth in the statement, adding the CBI was seeking a series of supply-side reforms including measures to address labour shortages.
And as the government raises corporation tax from 19 per cent to 25 per cent next April, the CBI wants ministers to provide companies with allowances to incentivise business investment.
Danker said that it was “incumbent” on Rishi Sunak, the prime minister, and Hunt to make “tough choices” for economic growth.
But he expressed concern “they will not do that . . . and we will regret that because it will trigger a series of decisions by businesses in the next few weeks that amount to almost a hibernation . . . that they will retract from investing in Britain”.
Danker said many companies were finalising their 2023 budgets this month with two scenarios: one with plans to invest and grow, and another reflecting a “doomsday” recessionary outlook.
“The government needs to be careful on Thursday that we don’t tip confidence in the wrong direction,” he said. “That’s a real risk.”
Danker said some multinational companies were already choosing to move investment away from the UK after the damage caused by Liz Truss’s disastrous “mini” Budget in September involving £45bn of unfunded tax cuts.
He also said there needed to be regulatory reform to make economic growth a primary objective, but added the government was still too “fixated about repealing EU law and not about what is restricting growth”.
“A political exercise of repealing EU law does nothing to help,” he said, referring to government legislation to review and repeal EU law.
Although Danker said he was one of the first CBI directors general not to call for widespread cuts to business tax, he added that the government “needed to be careful”.
He said the government should look to alleviate the burden of business rates, which are set to cost companies an additional £3bn in April because increases in the property-based tax will be based on inflation at a 40-year high of 10.1 per cent in September.
Danker warned this would lead to lower investment and closures on the high street.
The Treasury responded: “Difficult decisions are needed to restore confidence and economic stability, which will help balance the books, get debt falling and grip inflation. This is the only way to achieve long-term sustainable growth.
“The Autumn Statement on 17 November will set out our plans to boost growth,” it said, “building on the UK’s globally competitive corporation tax rate and investment incentives.”
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