CBI RESPONDS TO LATEST INFLATION DATA:
Rain Newton-Smith, CBI Chief Economist, said:
“Inflation was always likely to hit hard in April given the energy price cap increase. Looking ahead, inflation is likely to stay high, with a resulting historic squeeze in households’ incomes and a tough trading environment for businesses.
“It is critical the government explores options to help people facing real hardship now, and support cashflow for vulnerable firms. Stimulating business investment is also crucial, to both plug the near-term gap in growth and to shore up the economy’s potential to withstand future shocks. Turning good intentions on a permanent investment deduction into a firm commitment, setting out an infrastructure roadmap and publishing a digital strategy are steps which can be taken without delay.”
CBI RESPONDS TO LATEST LABOUR MARKET STATISTICS:
Matthew Percival, CBI Director for People and Skills, said:
“Despite a slowdown in growth this March, the UK’s labour market remains red hot with record vacancies and job-to-job moves.
“Firms are struggling under the weight of persistent labour shortages, rising energy prices and soaring inflation which is adding to the cost of doing business. Workers are also struggling, with inflation already 1.2% higher than pay and rising.
“Urgent action is needed to help alleviate the pressure facing businesses and communities across the UK. Putting pounds into the pockets of people facing hardship and stimulating business investment are two actions the government can take now that will help us to emerge from this crisis.”
CBI CHIEF CALLS FOR COST-OF-LlVING HELP FOR PEOPLE ON LOWER INCOMES
Government should immediately support those hardest hit, help firms with cashflow, and back investment in growth
Ahead of Wednesday’s monthly inflation figures – expected to show a further rise in prices well above the Bank of England’s target – CBI Director-General Tony Danker has called for immediate assistance for ‘people facing real hardship’.
As calls for an emergency budget grow, the CBI chief has waded into the debate suggesting a fully-fledged fiscal event is not necessarily required to announce support for the most vulnerable households nor to outline steps the government can take to get firms investing now and through the year.
CBI Director-General, Tony Danker, said:
“There’s a lot of debate right now about whether the economy needs a boost, an emergency budget, or action on the cost of living. At the CBI we think it’s vital that the Government moves on two fronts right away.
“The first is to help people facing real hardship now; it’s the moral underpinning of our economy and society. Recent surveys suggest more than one in 10 households have skipped – or had smaller meals – in the past month because of a lack of affordability, while around half a million more households are expected to face choices between heating and eating*. Putting pounds in the pockets of people struggling the most should not be delayed.
“Secondly; start stimulating business investment now – we will need to ensure that there is economic growth in the pipeline to avoid any downturn in our economy that could worsen or prolong the cost-of-living crisis.
To stimulate investment now the Government should:
- Cashflow support for firms – Extend and re-expand eligibility for the Recovery Loan Scheme, ensure continued flexibility with Time to Pay which recognises increasing cost pressures and re-issue unspent local authority grants
- Back green growth – Commit to the deployment of at least two more Carbon Capture clusters by 2030, and set out the Contracts for Difference model for hydrogen.
- Set out a roadmap for infrastructure – Publish a roadmap for the Integrated Rail Plan to speed up the delivery of the key planned investments in the rail network.
- Get money already announced flowing – Across Innovation Accelerators, Advanced Research Innovation Agency, and Help to Grow now that R&D allocations have been released.
- Unlock investment in digital – Build business confidence and willingness to invest by publishing the long-awaited Digital Strategy.
Danker added the Chancellor’s steer in the Spring Statement to use the Autumn Budget to stimulate investment in capital, skills and innovation should be solidified:
“The Chancellor’s clear intention to use a forthcoming Budget to cut taxes on business investment should become a firm commitment now. It will ensure that any firm pausing on investment now, will be bold, decisive and back their original plans. This matters for everyone, because it guarantees that any slowdown in growth will have a short and shallow shelf-life.”
On whether or not there is a need for major tax cuts across the economy, Danker was more cautious:
“We do need to avoid big injections to economic demand that might worsen inflation and focus on getting the supply side of our economy moving. So big economic boosters should be deferred until safe to do so. Government should stay flexible and support the economy in the right way at the right time.
On cashflow help for firms, he said:
“That would include announcing now an extension to the recovery loan scheme until the end of this year. It has already helped around 6,000 firms access £1bn. Further ways of supporting energy intensive industry – for example with network costs – should also be explored.”
*Research from 1. YouGov on behalf of the Food Foundation and 2. NIESR.
