Unleash green markets to deliver long-term prosperity – CBI urges Chancellor ahead of Autumn Statement
26 September 2023
Unleash green markets to deliver long-term prosperity – CBI urges Chancellor ahead of Autumn Statement
- Bolster sustainable growth policies to give businesses certainty and confidence to increase investment and capacity in the economy.
- Double down on green markets as a major opportunity to unlock growth and investment.
- Secure greater business investment from both domestic and foreign sources to boost productivity growth at a regional and national level.
- With household spending under pressure because of the high cost-of-living, boost business investment to ensure more balanced growth in the near-term and shore up the economy’s long-run potential.
The Chancellor has made significant progress in providing certainty to business in recent months, from the Spring Budget to the Mansion House speech.
Yet, firms are still grappling with higher costs, labour shortages and high interest rates – impacting investment plans. Against that background, the CBI is urging the government to prioritise measures to boost business investment in strategic areas that will drive sustainable growth.
The government has already adopted a number of polices advocated for by the CBI that will help to increase UK competitiveness, including enhanced childcare provision; increased support for occupational health; a business rates freeze; full capital expensing for three years; and investment zones based around economic clusters.
Rain Newton Smith, CBI Director General, said:
“The Spring Budget provided strong foundations for stability and growth and set the right tone in challenging economic circumstances. While progress has been made, weak GDP and productivity growth is still selling the UK short.
“Meeting our sustainable growth ambitions means not only ramping up FDI but getting businesses at home investing again at scale. We also can’t afford to be seen to retreat from high value green markets.
“We’re confident that the three-point plan we have laid out ahead of the Autumn Statement can get the UK back on the front foot in the quest for long-term sustainable growth, as well as providing the low-cost, high impact tools needed to deliver lasting prosperity and resilience.”
The CBI and its members have developed a 3-point plan for government that prioritises upskilling and talent development, establishing the UK as the most competitive business environment and grasping substantive net zero opportunities.
Key recommendations include:
(1) Enterprise: Deliver an internationally competitive business environment
- The UK must be seen as the place for firms globally to grow, scale and list.
- Core levers, including an incentivising tax regime, pro-innovation regulation and effective planning must be maximised to create a pro-investor business environment.
- Make full expensing permanent beyond the current 3-year window to unlock business investment across the economy.
- CBI analysis shows that this move could lead to a permanent boost of 21% to business investment and a 2% increase to GDP by 2030/31.
(2) Employment and Education: Mobilise the potential and productivity of the UK’s workforce
- Firms need support to remove barriers to work, upskill working people for the jobs of today and of the future, and critically address labour shortages which are holding back investment.
- Announce a two-year pilot to turn the Apprenticeship Levy into a “Skills Challenge Fund”.
- This will allow firms to spend the fund on a more flexible variety of accredited and modular training supporting the upskilling and productivity growth our economy needs.
- CBI survey evidence shows levy-payers would invest an additional 30% of their levy over the next 12 months under this policy.
(3) Everywhere: Realise the UK’s net zero growth opportunity
- Net zero presents unrivalled economic opportunities for business. As recent months have reinforced, countries that move at pace to adapt their economy to the risks of climate change can secure huge competitive advantages.
- Outsmart rather than outspend the USA and Europe on green growth initiatives, including announcing plans to establish a Net Zero Investment Plan, implement a targeted ‘green’ super-deduction for both incorporated and unincorporated businesses and bring forward proposals for next steps to mitigate carbon leakage.
- Deliver clear policy direction and delivery plans to cut emissions this decade, ensuring crucial private investment doesn’t flow elsewhere.
- Make good on commitments to speed-up planning processes and grid connections, deploying them at pace, across strategic projects and in partnership with business.
Louise Hellem, CBI Chief Economist, said:
“Firms are bracing for another tough winter ahead as they weather a number of economic pressures. The high cost of capital is proving particularly challenging, with businesses across the economy fearing they might need to slash capital expenditure over the next twelve months – putting a handbrake on growth ambitions.
“But there is good news. Government action really can help ease the path towards higher investment and deliver a boost to the country’s growth prospects overall. Significant opportunities are out there, like the up to £57bn of ‘green growth prizes’ the CBI has identified across the economy.
“With the right policy direction in place, and delivering a boost to business confidence, UK firms stand ready to seize those incredible opportunities and drive the economy forward.”