BUSINESSES LOOK TO GOVERNMENT FOR BOOST TO GROWTH
Recess is slowly drawing to a close. While Westminster may have seemed quieter than usual recently, it will be full steam ahead to the Autumn Budget once politicians return from their summer break. All eyes will be on Labour and the changes they hope to make in their first fiscal event to achieve their central growth mission.
The last few weeks have brought some reasons for cautious optimism. The latest inflation data – undershooting the Bank of England’s expectations – have been a welcome sign that price pressures are easing for households and businesses alike. That will give the Bank of England some confidence that domestic price pressures are less likely to derail a sustainable return to the 2% target. But that doesn’t mean that a second cut in interest rates should be taken for granted. With pay growth remaining stubbornly high, the MPC will still be mindful of any risks to the inflation outlook – keeping businesses on their toes.
Meanwhile, recent GDP figures have shown that the UK seems to have shaken off its slumber of recent years. It’s likely that those figures – quarterly, rather than monthly – overstate the underlying momentum. The fiscal statement will be a crucial opportunity to shift the dial on the UK’s growth trajectory – because there’s still lots of work left to be done to boost our economic prospects.
That’s reflected in the CBI’s latest surveys, which indicate that activity remains fairly subdued. Last week’s Industrial Trends Survey showed[JW1]? that output volumes fell in the three months to August – for the first time since March this year. And while manufacturers do expect to produce more output, those expectations have dropped in comparison to last month. Further signs that a stop-start recovery, as seen in recent months, continued in August.
Nonetheless, manufacturers are confident that their output will go up over the autumn – despite their expectations for growth decreasing from a two-year high last month. So, while there are some indications pointing to a continued recovery, the economy is not out of the woods yet, and UK growth expectations are lacking.
领英推荐
After a challenging few years, firms are looking to the Government to shift to those measures needed to raise the UK’s growth rate over the long-term. At the end of October, Chancellor Rachel Reeves will deliver her first fiscal statement in post. Businesses have been telling us that they need to see reforms to incentivise private investment – like those set out in our recent business tax roadmap[JW2]?, with action to simplify the tax landscape long overdue. Together with a bold industrial strategy to relaunch the UK as the best place for businesses keen to invest, and a comprehensive Net Zero Investment plan to boost green growth, these measures can significantly improve the UK’s economic trajectory.
The Autumn Budget will be a pivotal moment for firms to see whether this administration is serious about really getting the UK growing again. In the weeks leading up to the Budget, we’ll be working tirelessly – consulting with members to find solutions to our economic puzzles – and speaking to politicians to make sure we can live up to our economic ambitions.