Rishi Sunak has been urged to adopt a five-point strategy to tackle the escalating cost of doing business crisis.
The British Chambers of Commerce (BCC) is urging the chancellor to take bold and decisive action in his Spring Statement to restore business confidence.
As global and domestic headwinds mount following the invasion of Ukraine, the Chamber believes he must act now to protect the UK from a renewed economic crisis.
The call comes as businesses are increasingly reporting a crippling burden from a myriad of cost pressures, including rising raw material costs, soaring energy bills and other overheads.
Recession risk
The BCC’s latest economic forecast projects that the war in Ukraine has increased the risk of a recession in the UK by exacerbating the already acute inflationary squeeze on consumers and businesses and derailing the supply of commodities to key sectors of the economy.
Raising taxes at this time, the BCC says, would weaken the UK’s growth prospects further, by undermining confidence and diminishing households' and firms' finances.
The BCC has again asked the chancellor calls on the government to use the Spring Statement to enact the BCC’s "Five Point Plan to Tackle the Cost of Doing Business Crisis":
- Delay the impending National Insurance rise by one year to give firms much-needed financial headroom to weather this unprecedented surge in costs facing businesses and power the recovery.
- Temporary energy price cap for small businesses to protect smaller firms from some of the price increases they would otherwise face, offering the same protection as households.
- Additional financial support, through the expansion of the energy bills rebate scheme for households to also include small firms and energy intensive businesses, a new support fund, administered by Ofgem to support the smallest firms with their soaring energy bills and a six-month extension to the Recovery Loan Scheme, leaving it in place until the end of 2022.
- A moratorium, for the life of this parliament, on all policy measures that increase business costs, including no new business taxes or added regulatory burdens, but excluding only evidence-based changes to the National Living Wage.
- A commitment from the government’s Supply Chain Advisory Group and Industry Taskforce to continue to work with industry to urgently deliver practical solutions to ease the supply chain disruption and labour shortages that continue to drive the upward pressure on prices.
The BCC is also calling on energy firms to work more closely with government, business and other key stakeholders to provide more substantial support to help businesses and households to navigate this difficult period.
Confidence 'on the floor'
Shevaun Haviland, Director General at the BCC, said: “The Spring Statement is taking place against a backdrop of soaring uncertainty surrounding both the UK and global economy, so a business-as-usual approach from the Chancellor simply won’t cut it.
“Business confidence is on the floor. Coming so soon after a covid-induced squeeze on cashflow and investment plans, the cumulative effect of rising raw material costs, soaring energy bills and other overheads is causing many firms to take cost reduction measures. This is weighing down on their ability to invest, recruit and grow.
“Businesses strongly oppose a rise in national insurance contributions as it will be a drag anchor on the economy, landing significant costs on firms when they are already facing a raft of other cost pressures and have built up huge debt burdens.
Gruelling months ahead
Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce, added: “The government must now fortify our economy for what will likely be some gruelling weeks and months ahead.
"It must prove it is serious about doing whatever it takes to support companies through these domestic and global economic shocks.
“Implementing the Chamber network's five-point plan would help shield firms from the worst of the cost crisis - giving them headroom to keep a lid on prices, protect jobs and make investment that is so vital to sustaining our economic prospects.”
Aberdeen & Grampian Chamber of Commerce is one of the largest and most active Chambers in the country - and paart of the British Chambers of Commerce network of 53 independent, accredited Chambers in the UK, representing 70,000 member companies employing more than six million people.
With a further 70 affiliated Chambers easing access to countries and markets around the world, our shared aim is to support our members to do better business today through a range of support services while being key players in creating the conditions for the future economic success of the region’s we champion.