BUSINESS leaders are today calling on the Chancellor to use his upcoming Budget to prioritise measures to boost investment and export trade in order to rebalance the economy.
In a wide-ranging submission ahead of George Osborne’s 19 March speech, the CBI also proposes bringing in an energy package to encourage investment in generation, amid fears that the lights could go out if new capacity is not created.
The business body is also calling for the introduction of a capital allowance for buildings and the freezing of air passenger duty.
John Cridland, director-general of the CBI, whose member businesses employ about a third of Britain’s private-sector workforce, said the recovery was taking hold, but warned that further progress could only be made if a rebalancing of the economy took place. He said: “There are encouraging signs that business investment and net trade are on the up and now is the perfect time for the government to get full square behind it, particularly in the case of smaller firms.
“Above all, British businesses must have secure and affordable energy that enables them to compete internationally and keep jobs in the UK.”
A revival of the manufacturing sector, which remains well off its pre-crisis peak, is seen as key to rebalancing the UK recovery, which has so far been underpinned by domestic consumer spending.
Among the measures proposed by the CBI on the investment front is the extension of the annual investment allowance of £250,000 beyond its current deadline of January 2015, in a bid to boost capital spending in plant and machinery. It is also calling for a raft of measures to further support small and medium-sized enterprises, including making the Seed Enterprise Investment Scheme permanent and boosting the take-up of retail bonds by keeping compliance costs down.
Ensuring that upcoming regulation of the crowd-funding and peer-to-peer lending sector is “proportionate” is another of the group’s pre-Budget demands.
Cridland, pictured left, said: “We need to nurture the UK’s vibrant alternative finance market and encourage even more competition in banking so that businesses can get growth capital.
“Equity finance could play an important role in longer-term capital but the take-up in the UK is behind the EU average and well behind the likes of Sweden and Norway.
“Many smaller firms say they would be more likely to use equity finance if the investment was longer-term, which is why we want a tax incentive to encourage this.”
On the issue of energy supply, the CBI is calling for specific measures including a freeze on the carbon price floor from 2015-16 and an extension of the energy-intensive industry compensation package.
“We need to recognise that British businesses, especially energy-intensive industries, are struggling with high energy costs,” added Cridland.
Last month, the British Chambers of Commerce called on the Chancellor to focus on youth employment, training and enterprise in the Budget to avoid a “lost generation” and secure long-term growth.
The group said it was responding to employers’ concerns about the work readiness of young people.