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CBI Group says investment deduction would boost economy up to £40 billion a year

Data compiled by the CBI from 325 firms suggested that a permanent incentive could trigger an annual 17% uplift in capital spending.

20 February 2022

The CBI Group has called for a permanent investment deduction to succeed the Government’s temporary super deduction, claiming it would boost the economy by up to £40 billion a year by 2026.

Data compiled by the CBI from 325 firms suggested that a permanent incentive could trigger an annual 17% uplift in capital spending.

The CBI also said more than half of survey respondents had taken advantage of the super deduction or planned to do so to increase or accelerate capital investment plans.

Tony Danker
CBI director general Tony Danker called for a permanent incentive.

CBI director general Tony Danker said: “The Chancellor’s super deduction exemplified the boldness in public policy that we need to inspire investment and get the economy moving.

“Going by our survey results, it looks to be a real success. It’s started the job but cannot be a one-hit wonder. Evolving the policy from short-term fix into long-term strategy will give firms confidence that Government and industry are aligned.

“The UK is facing the highest tax burden in decades. But by rewarding firms who put money into their operations, we can unleash new innovation and productivity – the ingredients we need to escape the low-growth trap and build a stronger, sustainable and more equitable economic future.”

The CBI said the projected impact of a permanent incentive included:

– 24% of respondents said they would make additional capital investments in the UK.

– 13% would make additional investments  and bring forward investment timescales.

– A further 13% would accelerate UK investments already planned.

– Respondents revealed plans for £1.3 billion of capital projects and said a new investment deduction of the type proposed would see £169 million of that spending accelerated, and a further £224 million of projects added.

– This is equivalent to additional investment worth £40 billion per year by 2026.

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