Budget does not meet scale of government's ambition

Responding to the government’s Budget announcements today, Rain Newton-Smith, CBI Chief Executive, said:

“Our economy faces big global challenges, and the government has set out big ambitions to boost prosperity – today’s Budget does not meet the scale of that ambition. On the face of it, this Budget lacks the bold moves that would have made it easier for firms to invest, hire and grow.

“Fiscal discipline matters, and the Chancellor is charting a path through difficult circumstances. At a time of exceptional geopolitical pressures, using some fiscal headroom to absorb genuine short-term shocks is preferable to loading additional permanent costs onto business and weakening investment.

“Slowing the convergence of youth rates with the National Living Wage is a sensible move in face of the NEETs crisis and current labour market pressures. But the Chancellor could have gone further. Reducing the cost of hiring by increasing the employer NICs threshold would have given firms more space to create entry-level jobs and boost employment.

“Relief for business rates for retail, hospitality and leisure firms will be welcomed but misses the chance to deliver the wholesale reform to the system we desperately need.

“Financial Services firms in the UK already face a higher tax burden than those based overseas. The surcharge makes the UK less attractive to investors, and ultimately the cost will be paid by ordinary people through higher borrowing costs. The banking surcharge must be time-limited and the government must work with the sector on how to keep the UK ahead in a global competition.

“Households will be grateful for some relief on energy bills, but there is nothing concrete to provide breathing space for the vast majority of businesses who are already dealing with energy bills a third higher than their European counterparts, and with prices due to escalate further next year. Pledged future action to help business energy costs must be followed through in the government’s upcoming 10-year plan.

“It’s reassuring to see the government sticking to the corporation tax roadmap, and providing support for start-ups that nurtures innovative businesses to scale and grow in the UK is important for our long-term growth. More funding through the British Business Bank is a welcome step that can help unlock private investment, giving growing firms the backing they need to invest, innovate and create jobs.”