As we head into the Autumn, three big issues will shape the UK’s economic recovery in the months to come.
Government and business must collaborate to tackle labour shortages
First up, let me bust a couple myths about labour shortages, one of the biggest issues at the front of employers’ minds. Myth number one, labour shortages is a short-term issue that will resolve itself. No. In fact, labour supply issues could continue for the next two years.
Myth number two, labour shortages only affect a few isolated parts of the economy. Once again, no. While the impact on HGV drivers is one of the most prominent talking points surrounding this issue, there are huge ramifications for supply chains across the economy. Hotels are running low occupancy rates because they can’t get their linen laundered in time. Restaurants are left with minimal opening options, faced with either supplying cover for lunchtime or the evening.
We urgently need government, in collaboration with business, to intervene. More flexibility with the Apprenticeship Levy would enable firms to target funds towards genuine skill shortage areas. And let’s use the UK’s new powers over immigration to operate a genuinely agile Shortage Occupation List, by adding HGV drivers and other shortage areas to the list. Business can, of course, play its part too. Make your business as attractive as possible for retention and recruitment. Double down on D&I initiatives, flexible working and hybrid working to maintain employee satisfaction.
Check out the CBI’s Transforming Work Week, a series of events dedicated to discussing and providing insight into the pressing issues, and opportunities, currently facing business. Labour shortages, the future of diversity and inclusion, reskilling, hybrid working, we get into it all.
Investing in the UK, by the UK
Second, decisions taken now on investment could determine the UK’s growth trajectory for years to come.
We either need to go for growth, or risk slipping back to the tax and spend policies of the past.
There’s a danger the UK is falling behind. Instead of setting the benchmark for success at beating the policies of our global competitors in the present, we’re content with succeeding UK policies of our past governments.
We need to massively step up the level of investment in our economy through smarter, competitive taxation, new skills for new markets, public investment, and market making.
Hundreds of UK businesses have spoken to us, many who are global firms or have global customers, about what other countries are doing. Their strategies. The investments their governments are making. Comparing these strategies to the UK.
The pandemic has not stopped the clock on building the future economy, it’s accelerated it. If we look to the US for example, their administration has outlined plans for $800bn of investment in net zero technology over the next ten years. EU member states have pledged €223bn of green spending so far. These investments represent 3.8% and 1.8% of the size of their 2019 economies. Yet, this compares to 0.55% of the UK’s climate funding.
We need investment in the UK, by the UK. A mantra to stand by.
How can we effectively live with the virus?
The third factor is, of course, COVID-19. We need to learn to live with the virus. We need to do everything possible to keep the economy open. That means using all the COVID-19 secure tools at our disposal, to maximum effect. Mass testing. Vaccination. Therapeutics. And like all strategies, we should hope for the best but plan for the worst. So really strong, forward guidance from government will help businesses plan with certainty and confidence should infection rates start to rise as we approach the winter.
These policy downloads are designed to help you respond, reflect and adapt to live policy issues that affect your business. Please do let me know your feedback and what more you’d like from the CBI to help you navigate the months ahead.
Useful resources for your business
- Read the CBI’s three principles to government for living with coronavirus
- Read the CBI’s practical guide on adapting to hybrid working: how businesses can transition effectively including top tips and key takeaways from other businesses.
