Eve of Spring Statement remarks from CBI Chief Economist

INCENTIVISING INVESTMENT AND ENERGY EFFICIENCY CAN DELIVER ‘SORELY NEEDED’ CONFIDENCE – CBI CHIEF ECONOMIST

Helping firms and consumers tackle crippling energy costs, incentivising investment longer term and implementing a decarbonisation strategy underpinning the UK’s economic resilience are three areas of progress firms are seeking from the Spring Statement.

Amid rising inflation which is harming living standards worse than any time in a generation, Rain Newton-Smith, the CBI’s Chief Economist, has outlined why the Chancellor needs to simultaneously focus on changing the UK’s growth trajectory longer term and provide relief to vulnerable firms and consumers suffering now.

In remarks ahead of the Spring Statement, Rain will make clear action is needed now on both short and long-term measures.

Rain Newton-Smith, CBI Chief Economist, said:

“Understandably the Chancellor is expected to provide much-needed relief to vulnerable consumers reeling from rising prices, but unless we look after the UK’s growth longer term we’ll be storing up problems in the future. The time to act is now.

The economic effects of the Ukraine conflict are being felt across many areas of the economy now. This is especially the case for smaller firms outside of the energy price cap and those in energy intensive industries.

“Placing the UK on a path to sustainable prosperity by powering productivity growth and accelerating our transition to net zero is the only way to see real wage increases and improve people’s living standards.

“Short-term, policymakers need to shore up confidence by giving firms headroom to deal with the latest crisis. Next, incentivising investment far beyond political cycles is the best way of creating truly sustainable growth.

“Ultimately, the way to boost the UK’s economic resilience lies in securing and diversifying our energy supply while reducing domestic demand. We need to innovate and move faster on developing renewables – we cannot afford to make the same mistakes with decisions on nuclear and hydrogen. Nor can we afford to delay introducing a UK-wide programme increasing home energy efficiency. Above all. we can’t run the economy on empty.”

Short term:

• Maintain and expand the Recovery Loan Scheme until end 2022.
• Reduce network costs for Energy Intensive Industries (EIIs)
• Support for lower-income households

Longer term:

• Create a permanent investment deduction
• Set out a Contracts for Difference model on hydrogen
• Make homes and commercial buildings more energy efficient