Britain’s main business lobby groups have urged it Jeremy Hunt used this week’s fall statement to shake up immigration rules to support companies struggling with chronic staff shortages and the ongoing recession.
Head of Confederation of British Industry (CBI) said urgent action was needed from the chancellor on Thursday to strengthen the economy, including the “tough political choice” to allow more overseas workers into the UK as employers struggle with staff shortages.
With Hunt expected to offer thin gruel for businesses and individuals in an autumn statement focused on balancing the books through tax rises and cut spendingCBI said the “cost-free” option to bolster economic growth had to be taken or the business would “go into hibernation” this winter.
After the financial storm caused by Quasi QuartengThe disastrous mini-budget, Tony Danker, director general of the CBI, said members had agreed to “tough fiscal choices” on spending and taxes. However, CBI members fear that the government is not willing to face down the backbench Conservative MPs on issues such as immigration and planning reform, which divides the Tory party but can support the economy.
“With the tightening of fiscal and monetary policies, we need more pro-growth policies for our economy, if we are to avoid a decade of no growth,” Danker said. The chancellor has promised to set out a plan for growth on Thursday but said it must “overcome the real obstacles we face today”.
Ahead of what was expected be a savings budgetThe lobby group that speaks on behalf of 190,000 national firms, said failure to tackle the labor shortage and encourage business investment will be very damaging to the economy in the short and long term.
“It is not compatible with actions in spending and taxes with measures to tackle the lack of labor and productivity will likely be damaged in the short and long term,” said Danker. “Desperate labor shortages are driving up wages and stopping companies from growing.”
“Our planning rules allow local officials to block major projects that we need. Our regulatory regime is not doing enough to encourage investment and innovation. It is far more important to change that than a partisan effort to simply repeal EU legislation that will make no difference to positive for most companies.
Last week Simon Wolfson, chief executive of clothing and homeware retailer Next, urged the government to make it easier to allow foreign workers into the UK, saying this “not the Brexit I want”.
The conservative par and Brexit Supporters say the government is blocking much-needed workers from entering the UK, even as companies are desperate for labour.
Company bosses warned that sectors including hospitality, construction, and manufacturing suffers lack of staff is bad. The CBI said the government’s shortfall list, which offers easier work visas to foreign workers in specific occupations, could be extended. Student and graduate visa routes can also be added, as well as visas related to specific economic projects.
It comes amid signs of a collapse in business confidence after the turmoil unleashed by the Truss mini-budget. According to a poll of 1,400 UK firms by Accenture and S&P Global, boardroom confidence fell to its lowest level in at least 13 years in October.
Industry leaders have warned that crippling energy costs are a concern ahead of a “cliff edge” to support next spring, when the government’s energy bill relief scheme ends on March 31.
The British Chambers of Commerce (BCC) says half of small businesses will struggle to pay their bills when support ends, while calling on the government to announce new measures to help companies hit by rising costs.
Shevaun Haviland, director general of the BCC, described it as a worrying number but said it was “more concerning” that 4% said they would not be able to pay at all without subsidies.
With more than 5.5m small and medium-sized businesses (SMEs) in the UK, if this was replicated on a national level, more than 220,000 SMEs would be at risk, he said. “There’s a cliff-edge going on, and companies will struggle to see beyond that.”
The CBI said an autumn statement on Thursday that failed to provide enough encouragement for companies to invest in capital projects and new innovations could risk “another decade” of flatlining economic performance, making a fresh round of spending cuts and tax increases more likely.
Official figures last week showed the UK economy taking its first steps towards a potentially long recession in the three months to September, while inflation rose to its highest level since 1982.
In the chaos that followed the mini-budget, Liz Truss reversed her plans to cancel a rise in corporation tax next spring. The scheduled increase from 19% to 25% will now go forward from April. However, the CBI said the damage to the sentiment caused by A brief experiment with “Trussonomics” means that many global companies have chosen not to invest in England next year, while reminding that Hunt needed to change their minds.
“A lot of businesses are doing 2023 budgets right now,” Danker said. “They see growth ahead and want to invest but fear that all the signals from policymakers are warning them to do so.”