Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver, CBI Scotland director Hugh Aitken said in response to the Budget.
Aitken said: “As firms have been unwavering in their support for the Chancellor’s deficit reduction plans, they will welcome the clarity and balance provided by the new fiscal rules. Likewise, making the Annual Investment Allowance permanent at £200,000 will bring much-needed investment and is something the CBI has been calling for.
“The Chancellor has also provided clarity on the future direction of corporation tax rates for the remainder of this parliament. Combined with a welcome commitment to publish a business tax roadmap in April 2016, which the CBI has also called for, this must provide businesses of all sizes with the certainty they need to invest.
“While the further reduction in corporation tax is a welcome surprise, tax reductions for employers don’t appear to match the businesses most affected by a rise to £7.20 in the national minimum wage next April – a 7 per cent increase.
“The CBI supports a higher-skilled, higher-wage economy, but legislating for a living wage does not reflect businesses’ ability to pay. This is taking a big gamble that the labour market can absorb year-on-year increases of an average of 6 per cent. Bringing politics into the Low Pay Commission is a bad idea.
“Small shops, hospitality firms and care providers are the businesses that will face real challenges in affording the national living wage. Delivering higher wages can only be done sustainably by boosting productivity.
“The phasing out the bank levy means the Chancellor has tackled an issue that was making the UK uncompetitive for global banks headquartered here. But the proposed new banking profits surcharge will need to be carefully examined to avoid unintended consequences and ensure it doesn’t stifle choice in the banking sector.”