Business leader calls for emergency budget to help UK businesses
The leader of a leading UK business lobby group has called on Chancellor Rishi Sunak to draw up an emergency budget to support businesses struggling with rising costs of energy, raw materials and workforce.
Shevaun Haviland, chief executive of the UK Chambers of Commerce, will write to the government on Monday demanding a package of economic measures to ease the cost of doing business in the UK as demand shows signs of slowing.
In an interview with the Financial Times after her first year as chief executive, Haviland said business confidence had fallen sharply since early April as companies were forced to absorb soaring energy costs as economic prospects were deteriorating.
The Bank of England warned last week that Britain’s economy would slide into recession this year, with rising energy prices pushing inflation above single digits.
Haviland said there was a risk companies would stop investing in the UK. “Companies were optimistic about their outlook until last month,” she added. “Confidence has taken a big hit. Businesses know the government could help.
Haviland, who made a two-week tour of the UK to gauge business confidence, said some businesses reported their energy costs had more than doubled and wiped out their profit margins.
Companies were trying to limit the pass-through of rising costs to consumers, but many said they were forced to raise prices to share at least some of the pain, she added.
“The government thinks the cost of living is decoupled from the cost of doing business, but those are two sides of the same coin,” Haviland said. “The reduction in costs for businesses will benefit households.”
Haviland said demand remained strong for many businesses as they emerged from the coronavirus pandemic, particularly in hospitality and tourism, as people looked to spend on leisure and vacations, but notebooks orders from manufacturers deteriorated.
This would become a significant issue for the government as it hoped for a business-led recovery from the coronavirus crisis, she added.
Sunak shouldn’t wait until the fall to step in, when his next budget is expected, Haviland said. “It’s easier to keep a business open than to get it to reopen once it’s closed,” she added.
The British Chambers of Commerce, which represents tens of thousands of businesses across the UK through its network of chambers, urged Sunak to take immediate action to help businesses or risk eliminating “sprouts”. green of recovery”.
He proposed to the Treasury to push back its National Insurance increase which took effect last month to ease cost pressures on employers.
He also recommended that Sunak reduce value added tax on energy bills from 20% to 5%.
As many businesses worry about the impact of a potential new wave of Covid-19 infections on the workforce, Britain’s Chambers of Commerce have said the government should also bring back free testing from coronavirus for employers.
In its letter to the Treasury, Haviland cited a British manufacturer which exports to more than 70 countries and reported strong profits turning into an expected loss of £2million this coming year. She also highlighted a hotel business where energy bills increased by 250%.
Haviland raised concerns about rising interest rates for businesses that took on government-guaranteed debt to survive the pandemic, with loans expected to cost more to service just as businesses began to worry about falling demand. “Covid meant companies were using a lot of their money,” she said.
Finding and keeping workers was also a problem for almost every industry, Haviland said. “Workers are pushing for wage increases because they may see their own costs rise,” she added.
The Treasury pointed out that some high street businesses were eligible for 50% relief on business rates, as well as a freeze on the inflation component of property tax.
“No government can control the global factors driving up prices, but we will act where we can to support businesses,” the Treasury said. “In the spring statement, we went further, cutting taxes for hundreds of thousands of businesses by increasing the job allowance and cutting fuel taxes.”