The business lobbying group said if tax incentives for investment are made permanent it could help boost spending by £40bn.
01 March 2022
The Government should introduce permanent investment incentives once the current super-deductions for businesses come to an end next year, according to a business group.
The Confederation of British Industry (CBI) said if the Government wants to increase growth and productivity without resorting to future tax rises it should do more to help businesses invest for growth.
A permanent investment deduction, where companies can claim investments back in tax credits, could boost spending by £40 billion by 2026, the CBI added.
Any support should also be more finely tuned to encourage growth in the green economy and the apprenticeship levy should also be increased.
This should help the UK economy beat current Office for Budget responsibility (OBR) forecasts of economic growth of 1.3% to 1.7% and unveiled at the Spring Statement later this month.
A deduction will also help offset the impact of corporation tax rising from 19% to 25% in 2023, it added.
CBI Director-General Tony Danker said: “Business backs the Chancellor’s desire to foster a renewed culture of enterprise and deliver a more ambitious growth rate.
“His vision set out only last week to leverage the tax and regulatory system to promote business investment, upskill Britain’s workforce and stimulate innovation is the right recipe for future success.
“Faced with a record tax burden, a cost-of-living crisis, wage pressures and the end of the super-deduction, firms will be looking to the Spring Statement for a clear signal that the Government’s ambition will be matched by action.”
Rain Newton-Smith, chief economist at the CBI added: “This isn’t a case of business going cap-in-hand to Government and asking for a handout during hard times.
“Instead, we’re pitching a series of solutions that will lift the UK from the bottom of the G7 league on investment and drive productivity gains.
“With a relentless focus on unleashing investment-led growth, we’re showing how to deliver an economy that can respond to mounting spending pressures, while remaining lean, green and competitive.”
