- “We do not believe that there is a need for a Plan B. The deficit reduction programme is vital to stabilising public finances, and so boosting business confidence. But the government must introduce more growth-enhancing policies in the Autumn Statement.”
The British Chambers of Commerce (BCC) today wrote to the Chancellor of the Exchequer with a five point plan designed to boost business growth. With the UK facing a weak economic recovery, and concerns over the future of the Eurozone, the BCC set forth a number of measures the Chancellor should consider in his Autumn Statement, and beyond.
The BCC is committed to Plan A, and supports the government’s efforts to reduce the deficit at the current rate. However, there is room within the current spending envelope to stimulate business growth, and contribute to a recovery. The measures are, as follows:
1. Immediate and real action on existing pledges to reduce regulation
Despite promises by ministers to roll back the burden of red tape, firms have yet to see a real difference on the ground. The Autumn Statement should include a comprehensive deregulation plan Business needs to see a clear and unequivocal list of major regulations that will be pared back or renegotiated in Brussels between now and the end of the current Parliament in 2015. In addition, the government must introduce a complete moratorium on new domestic regulation that would have a negative impact on growth and business confidence.
2. The Bank of England should instigate a further round of Quantitative Easing
The MPC should consider an additional £50bn of QE, provided that this additional funding is primarily used to purchase securitised SME loans, loans made for infrastructure projects, and other private assets. In addition, the imposition of negative interest rates on deposits held by commercial banks at the BoE could also help to boost credit availability.
3. Re-prioritisation within the existing spending envelope to promote investment and exports
The government should introduce a small number of pragmatic, pro-growth fiscal proposals that have the potential to trigger stronger business investment. These include extending the National Insurance Contributions holiday, providing additional trade finance support for SMEs, doubling the Annual Investment Allowance, and a commitment to restore the UKTI budget. These measures could be implemented at the time of the Autumn Statement or at the latest by Budget 2012.
4. If economic growth worsens, a major reprioritisation of spending will be necessary
If conditions have not improved significantly by Budget 2012, there may be a need for radical action. Dismantling the political ‘ring-fences’ around health and overseas aid spending may be necessary to ensure that the Government is delivering maximum support for growth and jobs. Subsequent measures should include: a 1p reduction in employer National Insurance Contributions; the abolition of the 50p income tax rate; extending the Enterprise Finance Guarantee; and enhanced capital and investment allowances to bring forward investment.
5. Additional accelerated infrastructure spending based on a National Infrastructure Plan.
The UK’s transport, energy and digital infrastructure is critical to business competitiveness. We support accelerated spending on infrastructure as part of a detailed National Infrastructure Plan. This would give private investors the confidence to create additional activity and jobs in this area.
Commenting on the proposals, John Longworth, Director General of the British Chambers of Commerce (BCC), said:
“The UK’s economic recovery is more anaemic than most expected at the start of the year. We expect weak growth of 1.1% in 2011, and the economy faces major hurdles ahead, with concerns around the Eurozone, and US debt ceiling. The future of the recovery relies upon stimulating growth across businesses. Only a strong and prosperous private sector will allow us to provide the public services we all want and need. The government needs to be prepared to introduce a package of measures that will strengthen business confidence, allowing them to grow, invest, export, and create jobs.
“We do not believe that there is a need for a Plan B. The deficit reduction programme is vital to stabilising public finances, and so boosting business confidence. However, we urge the government to look to a Plan A+, which would see more growth-enhancing policies introduced in the Autumn Statement. It must also consider the potential of more radical measures within the spending envelope, should the situation worsen. The coalition has yet to display enough urgency on tackling those issues facing businesses. While the government has identified many of the right policies, they must be delivered as a matter of priority.”