Chancellor’s spring statement must act to maintain growth, warns CBI chief

Around £100bn could be added to the Treasury’s coffers by 2030 if the UK bucks current predictions and achieves a more ambitious 2.5% rate of growth, according to the latest CBI analysis.

Last week, the Chancellor set out his economic vision for the future in the Mais lecture, identifying Capital, People and Ideas as priorities to create a higher trajectory for growth, a lower tax economy and a new culture of enterprise. 

The CBI is urging the Government not to ‘waste a single moment’ and use the upcoming Spring Statement as a launchpad to achieve just that. With the OBR projecting post-recovery economic growth of just 1.3-1.7%, the Spring Statement must be fully utilised if the economy is to see higher growth. Without a permanent investment incentive to replace the super-deduction, for example, CBI forecasts predict the UK will remain bottom for business investment among the G7 in 2026.

The super-deduction allowed companies to cut their tax bill by up to 25p for every £1 they invest.

The CBI also says it has set out a number of sustainable pro-growth policies aimed at sparking underperforming productivity growth via business investment.

This includes a permanent investment deduction, boosting business investment by £40bn a year by 2026 and offsetting the impact of corporation tax rise.

  • It also argues that the Apprenticeship Levy should be turned into a Skills Challenge Fund that delivers both employer flexibility and high-quality training – as well as rewarding those firms that outperform on skills investment. 
  • Another suggestion was the creation of an independent Council for Future Skills – modelled on the Low Pay Commission – to review current labour shortages and skills gaps, and make recommendations.

Speaking ahead of the Spring Statement, CBI Director General Tony Danker said:  “Business backs the Chancellor’s desire to foster a renewed culture of enterprise and deliver a more ambitious growth rate. His vision set out only last week to leverage the tax and regulatory system to promote business investment, upskill Britain’s workforce and stimulate innovation is the right recipe for future success. 

“Faced with a record tax burden, a cost-of-living crisis, wage pressures and the end of the super-deduction, firms will be looking to the Spring Statement for a clear signal that the government’s ambition will be matched by action. 

“That is the time to act if we want to push the economy onto a higher growth trajectory. It takes time for policies to kick in and deliver results, so there’s no point in waiting until an autumn Budget. Without serious action, we risk the economy simply drifting towards low growth once the V-shape bounce ends. The Government cannot waste a single moment.

“We all share the vision of a more sustainable and competitive economy that can pay down its debts and invest in public services. But that means backing business and going all-in on the UK’s strengths. Fail to act immediately on flatlining growth and we risk that brighter future slipping through our fingers.”