Ahead of the Budget, the British Chambers of Commerce (BCC) is calling on George Osborne to deliver a Budget for Growth, with radical policies to support the growth of the private sector during 2011 and beyond.
The BCC believes that the Government’s rhetoric on growth to date has not been matched by the significant policy and cultural changes needed to deliver business confidence and enterprise growth. Budget 2011 provides the Government with a critical opportunity to set out firm and unequivocal policies to support business.
In its submission to the Chancellor, which includes a revised economic forecast, the BCC makes the following recommendations:
Make Recruitment Easier
Unemployment continues to increase as the legislative burden on employers grows, leaving Britain at risk of a jobless recovery. The BCC’s recommendations to make it easier for business to recruit include:
· Deregulation: Delay or scrap the implementation of all new employment legislation and introduce a moratorium on additional employment regulation for the remainder of this Parliament.
· Lower Youth National Minimum Wage: Incentivise youth unemployment by suspending or lowering the Youth and Development Rates of the NMW, or by providing employers with a National Insurance incentive to take on young people.
Simpler, Faster Planning Decisions
Businesses must be able to expand and extend their premises without falling foul of lengthy bureaucratic planning decisions. The BCC’s recommendations on planning include:
· Opportunity Zones: Create zones to incentivise high-value business growth in specific areas across the country for businesses with tax breaks and the total relaxation of planning laws
· Clarify role of LEPs: Address the continued uncertainty around role of Local Enterprise Partnerships with clarity around roles, functions and resourcing.
Support British Exporters
UK businesses are simply not exporting enough, and it is unacceptable that many firms are missing out on these opportunities because they can’t break into new markets or access the trade finance they need. The BCC believes the Government can better support exporters by:
· Strong UK export credit agency: The Export Credits Guarantee Department is not well known amongst smaller businesses and must expand both its reach and its support for SMEs.
· Stronger trade promotion: Trade promotion is as essential to the economy as the NHS is to health. The Government must restore the £25m cut from trade promotion budgets, and ensure that our exporters have overseas presence on the same scale as our continental and US rivals.
Increase Business Investment
· Access to Finance: Beyond lending targets, banks must be transparent with clear lending processes, and offer local, professional support to businesses. Relationship management and localism for banks must take precedence.
· Capital Allowances: Smaller firms may miss out on reduction of the headline rate of Corporation Tax. Businesses should be able to carry forward unused relief, thereby helping them to make the choice to invest in new plant and grow their operations.
BCC Economic Forecast
In a revised economic forecast, the BCC expects to see the economy rebound in Q1 2011, following severe weather in December, followed by slowing growth in Q2 and Q3 as austerity measures are implemented. But we predict the recovery will gather pace during Q4 2011 and during 2012.
· 2011 GDP: we now predict annual average GDP growth of 1.5% in 2011, down from our forecast of 1.9% in December. This downward revision is accounted for entirely by the GDP fall in Q4 2010 – meaning that growth from Q4 2010 to Q4 2011 will be slightly higher than assumed in December.
· 2012 GDP: provisional forecast of 2.2% growth, slightly higher than December’s 2.1% prediction.
Although temporary increases in inflation remain likely over the next few months, the BCC continues to believe that premature interest rate rises risk derailing economic recovery. The Monetary Policy Committee must maintain interest rates at their current level until the economy has absorbed the initial impact of the fiscal austerity plan.
Commenting on the upcoming Budget, David Frost, Director General of the British Chambers of Commerce, said:
“The Government’s rhetoric on growth has not yet been matched with real action to deliver a strong environment for the private sector to flourish. Business is not seeking handouts but needs the Government to create the climate in which they can grow. That means less not more employment legislation, a greater focus on boosting British exports and keeping pressure on the banks to ensure that businesses can get access to finance.
“It is time for the Government to take some pro-growth steps. A ‘Budget for Growth’ will be judged by whether it boosts business confidence, encourages investment and rekindles the spirit of enterprise. If the Government provides a radical framework, business will do what it does best – creating wealth and jobs, innovating to deliver strong companies and providing the much needed growth for this country.”