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Is your business prepared for high inflation and a future recession?

• With interest rates rising at the fastest pace in 27 years, the costs of external funding - such as loans or bonds - will be directly impacted.
• Our economists believe businesses can expect further rate rises and should prepare for a recession over the coming year with a historic hit to real incomes. While keeping inflation under control is vital, many businesses will struggle to prepare for the future while dealing with the rising cost of doing business today.
• So what can your firm do? Against the backdrop of so much uncertainty, planning and preparation will be key. Firms should ensure potential future rate rises are included in financial planning and consider what impact rising inflation could have on business models, for example in terms of demand.
• As a member, your finance and planning teams can benefit from exclusive access to the CBI’s economic analysis. Find our latest economic resources on our Cost of Doing Business Hub with up-to-date analysis to help you plan and navigate uncertainty.

Can your business play a role in supporting SMEs in crisis?

• Operational costs are soaring for businesses of all sizes, but smaller companies are more likely to feel the impact. In particular, late or poor payment practices can adversely affect SMEs because they’re less likely to have the means to ensure prompt payment.
• While large businesses stepped up following the pandemic to support supply chains, there are always opportunities to do more. That’s why we’re calling on the wider business community to help SMEs by paying promptly. SMEs are a key part of a dynamic and flourishing economy, and the reputational risk to larger firms should not be underestimated if paying promptly is impacted as a result of rising costs.
• Members can use the CBI’s new payments toolkit to unpick what financial technology (fintech) can do to support your business with cashflow management, late payments and reducing the costs of doing payments - this includes case studies of businesses that have partnered with fintechs to help them get paid quicker.

How can business start preparing for new leadership?

• After a year of the CBI campaigning on a platform of growth, it’s heartening that leadership hopefuls Liz Truss and Rishi Sunak, as well as Labour leader Sir Keir Starmer, are putting internal squabbles aside to stand on platforms of economic growth.
• We’ll be working hard over the summer to widen the conversation about growth beyond the narrow lens of Corporation Tax. Businesses need and deserve better policies on wide-ranging issues such as skills, decarbonisation and  pre-profit taxes to incentivise investment. This will enable us to grow our way out of this economic downturn.
• But how can business prepare for new leadership under a cloud of uncertainty? Firms must plan for different Budget scenarios that could impact how you operate. Under a Truss government, you can expect an Emergency Budget in early/mid September, so be ready for speedy decisions on urgent issues such as the energy crisis and the cost of living. Under Truss, it’s likely you’d see the cancellation of the planned 6% rise in corporation tax and NICs increase. Announcements on the longer-term probably wouldn’t be on the cards until late autumn. Under a Sunak government, early energy support is also expected, although with a late budget the most likely scenario; corporation tax would likely remain at 25%, with the major difference being more focus placed on investment incentives through tax.
• For a simple and direct breakdown on Truss and Sunak’s policy positions impacting business, read our latest member-exclusive analysis to support you in your planning.
• Whatever the timing, the CBI will be championing the issues that matter to you – from skills funding reform to R&D tax credits. We have and will continue to engage broadly with senior civil servants, advisers and potential future cabinet ministers on both sides over the summer to ensure business is at the heart of any new government’s policies.