BCC IN-DEPTH BUDGET RESPONSE: Measures unlikely to shift dial on business investment

March 15, 2023

Giving her full reaction to today’s spring budget, Shevaun Haviland, Director General of the British Chambers of Commerce, said:

“The Chancellor has acted to address the unfilled jobs blighting our economy. It is especially good to see the help on childcare and for over 50s workers.

“The plans for full capital expensing are also a step in a right direction to offset the rise in corporation tax. But as the OBR highlight a high level of uncertainty, the jury is out on how much it will help compared to the Super Deduction scheme.

“The most recent BCC survey on investment found that only a fifth of firms were increasing investment and a similar number were reducing it. This budget looks unlikely to change that dynamic.

“This is especially true for almost half of businesses who told us they will struggle to pay their energy bills from April.

“They cannot invest when they are fighting to survive. Beyond the £63m of additional support targeted for leisure centres, there is little that will provide comfort to these firms.

“The Government also failed to reform business rates which we have repeatedly called for. If the UK’s innovative growth industries are to remain competitive on the world stage, then Government must shift the dial further on investment, both within the UK and from overseas.”

 

Alex Veitch, Director of Policy at the BCC, said:

Skills shortages

“It is encouraging to see the Migration Advisory Committee’s recommendations on adding five new construction jobs to the Shortage Occupation List have been accepted. More frequent reviews of the system are also good news, but the lack of skilled labour is having a corrosive effect on our economy. This shift to a new system cannot come fast enough and other sectors facing huge recruitment pressures, such as hospitality, must be given help.”

 

Business Rates

“We are disappointed to see that the Government failed to undertake further reform of the business rates system, which places a significant burden on firms.

“We need to see a move to annual revaluations, and a more ambitious approach that incentivises rather than disincentivises growth and green investment in the long term.”

 

Energy Support

“Once again Government has failed to understand that the energy crisis for businesses and households are two sides of the same coin. Extending the Energy Bills Relief Scheme for households is hugely welcomed, but with reduced support for businesses planned from April, and no sign of further support, many will be reliving the anxiety they were facing a few months back.

“We included seven energy recommendations in our budget submission, but not one of these has been acted upon today.”

 

Trade

William Bain, Head of Trade Policy at the BCC, said:

“Trade was not mentioned once by the Chancellor, yet again he has neglected the significance of exports – which are a big driver of economic growth. While the later announcement on easing some customs procedures is welcome, it doesn’t address the fundamental challenges facing our exporters.

“The OBR forecasts predict a drop of 6.6% in export volumes in 2023 followed by a further drop of 0.3% in 2024. This would mean two years of lost growth for UK goods and services exports.

“The UK Government must urgently look to improve our trading conditions with the EU and move heaven and earth to increase take up of preferences in new and existing trade agreements, which many small businesses remain largely unaware of.”