The boss of one of Britain’s biggest business bodies says it is “utterly urgent” the government creates confidence in the economy through its Budget next month. Tony Danker, director general of the Confederation of British Industry (CBI), believes the UK can return to growth in 2023 and inflation can fall - but only if the chancellor sets out a clear plan for growth.
Jeremy Hunt is due to make his Budget statement on Wednesday, March 15. It will be followed by a forecast on the economy and public finances from the Office for Budget Responsibility.
“A lot of businesses have come into this year with two scenarios - a central scenario for revenue which is modest growth and a recessionary scenario where all these headwinds - inflation, political uncertainty, the energy market and war in Ukraine - continue to grow,” Mr Danker told BusinessLive.
“The government [needs to] create momentum and confidence in the first part of the year. It will unlock planned investment and innovation, and it says to people ‘if you are thinking of waiting there is really no need to wait, go now.’ Any sense that we shouldn’t be thinking of growth now, that we should only be thinking of bringing down inflation, that is neither true not helpful.”
Speaking on a visit to the South West, Mr Danker said the Budget in March needed to be about returning to growth while rejecting suggestions that could be achieved through mass tax cuts. He did not specify details of what the CBI would like to see in the Spring Statement, but called on the government to use the tax system to incentivise investment.
He said the chancellor also needed to release further plans for how the UK would achieve its net zero targets as well as setting out policies to address labour shortages.
“[The government needs to] give people confidence that we are going to tackle economic inactivity. If those things are present in the Budget, it strengthens the elbow of [potential investors] who are are worried about the economic climate. It turns around and says to them ‘do invest’ as we know about the issues and we are tackling them and we have a plan.
“The louder that message comes out and the more meat on the bones there is against that in the Budget I think that is the difference between a year of growth and year of non-growth."
Mr Danker said although many business-to-consumer firms were feeling the squeeze, there were still “strong levels of demand” in many business-to-business industries.
'By the end of the year inflation will come down'
“There are reasons for optimism. I think by the end of the year inflation will come down and the economy will be stabilised. We need to be careful we don’t use some of the politics of Westminster and some recent volatility as an excuse not to go after opportunity.
“I don’t think it’s doom and gloom, I am quite optimistic about Britain’s economic opportunity - the thing I am anxious about is the government has not yet set out a clear path for growth. I am pretty confident the Budget in March will set out some real meat against that which I think will tilt confidence for the better.
"If the government is getting behind areas like investment, net zero and labour and skill shortages, I think that will add to the sense of momentum that will mean the UK recession will be short and shallow.”
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