Speedy recovery demands support for business - Liz MacAreavey
We have our fourth Prime Minister in six years, facing some of the most challenging political and economic decisions in generations. We will see how this new cabinet’s strategy plays out in the coming months.
Businesses, particularly SMEs, will be eager to hear the details of the announcements at Liz Truss’s first PMQ around the capping of energy bills and immediate support for the economy.
With the Governor of the Bank of England now stating there is nothing to be done to avert the impending recession and Red Flag, the business tracking service, suggesting up to 25,000 businesses are facing insolvency, we may find a very different labour market around the corner as businesses choose to pass on costs or cut spending and staff. It is a bleak outlook for businesses and households across the country.
Recovery is predicted to take to 2025 and with the ongoing war in Ukraine showing no sign of abating; we are looking to both the government and Bank of England for the right judgements and policies to avoid embedded inflation and ensure the fastest possible return to stable growth and our target of 2% inflation.
While tax cuts are promised, we can be sure they will be accompanied by higher interest rates. And so, it is reasonable that our new Prime Minister Liz Truss accepts that the first stage in the journey to recovery needs to be support for businesses, many of which are still recovering from the impact of the coronavirus pandemic.
Edinburgh Chamber has backed calls put forward by the British Chambers of Commerce and the Scottish Chambers of Commerce to ease the critical pressures on businesses, largely fuelled by soaring energy costs, skills and staff shortages, and high levels of inflation.
These calls included providing a Business Relief Package at a similar level of support offered during the pandemic, in line and alongside support that needs to be offered to communities and households. In addition, we asked UK Government to give Ofgem further regulatory powers to force energy suppliers to offer fixed-term contracts to non-domestic customers; to cut energy costs by reducing VAT from 20% to 5%; to temporarily reverse NICs to help both businesses and workers, and to help address skills and staff shortages through a more cohesive immigration policy.
We were pleased to note the priority given to tackling soaring energy costs by the new Prime Minister, but we need to look at the detail of support being offered and expect that she will continue to refine and progress support for businesses and citizens. We look forward to welcoming more detail on how this will be delivered, at pace.
From our Scottish Parliament, we have also called for the Non-Domestic Rates (NDR) Revaluation due to take place in 2023 to go ahead as planned, without any further delay; place a moratorium on all policy measures that increase business costs for the remainder of this parliament; pause burdensome regulations such as changes to the non-domestic rates appeals system and new taxes such as the workplace parking levy and tourism tax.
Businesses have been predicting since early 2021 that they are facing unsustainable rises in costs. The scale of the crisis has reached an existential tipping point, and with many on the brink, we simply cannot afford any more inaction.
We also support the key points of the Scotland’s Urban AGE 2 report – commissioned by Aberdeen, Glasgow and Edinburgh Chambers – which include the need for greater autonomy for Scotland’s City Regions (indeed the UK city regions) as the vital drivers of our economy.
In particular, local levers around taxation and immigration that would allow informed and educated regional solutions to regional issues.
Much has been written and spoken about the cost of living crisis – and rightly so.
Households are under massive pressure, and help is needed. But the Cost of Doing Business crisis is just as important, and help is also needed for the businesses that will drive our wealth and job creation as we turn things around and enjoy a future that is much more prosperous.
Liz McAreavey, Chief Executive at Edinburgh Chamber of Commerce