November 17 – a huge day for our economy - Liz McAreavey
It is no exaggeration to say that the eyes of business will certainly be on the Chancellor Jeremy Hunt next week when he delivers his fiscal statement on November 17.
The measures he details to fill the UK’s multi-billion-pound fiscal black hole will have a huge impact on how our economy and businesses can operate in the months and possibly years to come.
Finding the right balance to calm monetary and financial markets, stimulate economic growth, and maintain acceptable levels of essential services will not prove easy – and there is no doubt his task has been complicated by the recent loss of confidence in UKG as a result of his predecessor’s ‘mini-budget’.
We also have a responsibility to the continuing urgent need for concerted global climate action - as is being outlined right now at COP27 – and all of the challenges and opportunities this brings.
All this while the Bank of England takes action to return inflation to its 2% target and are forecasting a two-year recession.
Businesses currently face a host of challenges which threaten the survival of many; uncertainty over
energy bills cap, labour and skills shortages, 40-year high inflation and rising interest rates, and also how to transition to net zero, so November 17 is a vital date.
Chancellor Jeremy Hunt has warned he will have difficult choices to make in his autumn statement, and that will be followed by the Scottish Government budget for the coming year on December 15, with many departments braced for real-terms cuts. Let’s hope there is sufficient focus on how businesses can survive, grow, invest and ‘Green’ in the coming years.
British Chambers of Commerce has created a Business Manifesto, much of it relevant to our members in Scotland, and has written to new Prime Minister Rishi Sunak seeking his support. It has 17 actions, but in our view, top of the list for urgent action are:
Investment in infrastructure - Government must prioritise long-term growth by financing public projects, with a particular emphasis on green and digital infrastructure. As a result of the Multiplier Effect, investing in public infrastructure, will have a high value impact on growth; stimulating local economies and creating jobs across the UK.
Energy support for businesses - Rising energy costs is the number one concern cited by businesses. Government must provide certainty on how the energy support package will work from April so that businesses can plan for the future.
Tackling the tight labour market - There are currently 1.2 million unfilled jobs in the UK labour market, meaning businesses must turn new work away. Government must promote the creation of a skilled workforce by offering tax breaks to businesses that invest in training and upskilling. The UK also needs an immigration system that caters to the needs of the labour market. A reform of the Shortage Occupation List is urgently required to help businesses fill job vacancies when they cannot recruit locally.
Promoting export-led growth - More than a quarter (28%) of SME exporters reported decreased sales in Q3 of this year. Barriers to trade must be removed to allow firms to realise their full trading potential. The UK Government must work with the European Commission to reach a negotiated solution on business compliance burdens with the Protocol on Ireland/Northern Ireland.
Green Economy Leadership - Government should expand the list of energy saving products eligible for lower VAT for business such as LED lighting. They must also ensure that investments in green building improvements are eligible for Business Rates Relief and provide targeted grants to drive uptake in higher-cost items.
In the remaining period of this UK Parliament, we need to see the Government strike the right balance for growth without compromising our great public institutions that so many of us rely on. People run businesses and businesses rely on people. The British Chambers Business Manifesto offers many solutions, including cost-free options, to get our economy moving in the right direction again.
In Scotland, we will continue to engage with Ministers on how to redress the balance to ensure Scottish businesses are not burdened with additional regulations or new tax burdens during this current economic crisis or face the complexity of divergence of policies across governments.
In terms of climate change, the chamber network and our businesses remain utterly committed to tackling climate change. Despite the huge difficulties businesses face, they want to continue to do the right thing and move towards net zero carbon.
To do that, greater policy support is needed to create a positive environment for investment and growth.
We need the Scottish and UK Governments to come together to create a long-term growth plan that involves investment in people and skills; supports businesses to adapt and thrive; and builds good relationships with our global allies to get our businesses selling again.
We know challenging times are ahead, but when faced with hardship, as the pandemic illustrated, we adapt, innovate and find a way through. Businesses will do what it takes; however we need a stronger partnership with government so we work together through the difficult years.
Liz McAreavey, Chief Executive of Edinburgh Chamber of Commerce