Britain’s leading business lobby group urged Jeremy Hunt to use this week’s autumn statement to shake up immigration rules to support companies struggling with chronic staff shortages and a looming recession.
The head of the Confederation of British Industry (CBI) said urgent action by the Chancellor is needed Thursday to strengthen the economy, including “tough political choices” to allow more workers overseas in Britain while employers jobs struggle with a desperate lack of staff.
With Hunt expected to offer subtle gruel for businesses and individuals in an autumn statement focusing on balancing accounts through tax hikes and spending cuts, the CBI said “no-cost” options need to be adopted to bolster growth. economic or that businesses will “go into hibernation” this winter.
After the financial storm caused by Kwasi Kwarteng’s disastrous mini-budget, Tony Danker, the chief executive of CBI, said its members have accepted “tough fiscal choices” on spending and taxes. However, CBI members feared the government was unwilling to confront reserve Conservative MPs on issues like immigration and planning reform, which divide the Tory party but could support the economy.
“With fiscal and monetary policy tightening, we need far more growth-enhancing policies for our economy if we are to avoid a decade without growth,” said Danker. The chancellor promised to define a growth plan on Thursday, but said it is necessary to “address the real barriers we face right now”.
In view of what an austerity budget should be, the lobby group speaking for 190,000 companies nationwide said failure to address labor shortages and encourage business investment would be highly damaging. for the short and long term economy.
“Failing to combine spending and tax action with measures to address labor shortages and productivity risks being detrimental in the short and long term,” said Danker. “A desperate lack of workers is inflating wages and stopping companies from growing.”
“Our planning rules allow local officials to thwart the large projects we need. Our regulatory regime does not do enough to incentivize investment and innovation. It’s much more important to change that than partisan efforts to simply repeal EU laws that won’t make any positive difference for most businesses. “
Last week Simon Wolfson, chief executive of clothing and household goods retailer Next, urged the government to make it easier for foreign workers to enter the UK, saying this “isn’t the Brexit I wanted.”
The conservative peer and Brexit advocate said the government is barring much-needed workers from entering the UK, even as companies were desperate for labor.
Company leaders warn that sectors such as hospitality, construction and manufacturing are suffering the worst staff shortages. The CBI said the government’s list of deficient occupations, which offers easier work visas for foreign workers in specific jobs, could be expanded. Visa paths for students and graduates could also be added, as well as visas linked to specific economic projects.
It comes amidst signs of a collapse in business confidence following the turmoil unleashed by Truss’s mini-budget. According to a survey of 1,400 UK companies by Accenture and S&P Global, trust in boardrooms fell to its lowest level in at least 13 years in October.
Industry leaders have warned that crippling energy costs are cause for growing concern ahead of a “cliff edge” in support next spring, when the government’s energy bill relief scheme is expected to end on March 31.
The British Chambers of Commerce (BCC) said half of small businesses would find it difficult to pay their bills after the support ends, while calling on the government to announce new measures to help businesses with rising costs.
Shevaun Haviland, general manager of the BCC, described it as a worrying number, but said it was “even more worrying” that 4% said they would not be able to pay without the subsidy.
With over 5.5 million small and medium-sized enterprises (SMEs) across the UK, if this were replicated nationally, more than 220,000 SMEs would be in danger, he said. “There is a looming precipice and companies will struggle to see beyond.”
The CBI said on Thursday that a fall statement that failed to encourage companies enough to invest in capital projects and new innovations could risk “another decade” of flat economic performance, making a new round of spending cuts more likely. tax increases.
Official data last week showed that the UK economy took its first steps towards a potentially prolonged recession in the three months to September, while inflation is at its highest level since 1982.
In the uproar that followed the mini-budget, Liz Truss overturned her plan to cancel a corporate tax hike next spring. The planned increase from 19% to 25% will now go on from April. However, the CBI said the sentiment damage caused by the brief experiment with “Trussonomics” meant that many global companies would choose not to invest in the UK next year, warning that Hunt had to change his mind.
“A lot of companies are doing their budgets for 2023 right now,” Danker said. “They see future growth and want to invest, but fear that all signs from policy makers are warning them against doing so.”