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FILE PHOTO: Woman holds British Pound banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration
UK needs to make politically unpopular reforms to boost growth, business group says
LONDON (Reuters) – The British government must be willing to make politically unpopular choices in areas such as immigration and regulation to boost business investment and economic growth, the Confederation of British Industry (CBI) said on Monday.
Finance minister Jeremy Hunt is due to set out a raft of spending cuts and tax rises at a budget statement on Thursday as he seeks to show Britain can fix a hole in its public finances.
The CBI said not matching those with measures to tackle labour shortages and productivity, at a time when many businesses are drawing up their 2023 budgets, would likely be damaging in the short and long term.
“Changes to immigration, regulation and planning are now critical levers to get firms to invest but will require the government to make political sacrifices,” the CBI said, setting out a series of policy proposals which it acknowledged many in the governing Conservatives would find hard to support.
These include being more flexible on immigration including for occupations dogged by labour shortages, and adding student and graduate visa routes and visas linked to specific economic projects.
It also called on the government to streamline “the slow and inconsistent planning system”, and speed-up decision-making for major developments.
Hunt’s predecessor Kwasi Kwarteng and former prime minister Liz Truss had promised supply-side reforms to boost growth but did not manage to set them out before being forced from office by financial market turmoil sparked by their package of unfunded tax cuts and new public spending.
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“All of us need to accept now that with fiscal and monetary policy tightening, we need many more pro-growth policies for our economy, if we’re to avoid a decade of no growth,” CBI Director-General Tony Danker said in a statement.
Danker said that if Hunt’s plan for growth was only “warm words and aspirations” it wouldn’t stop businesses pulling back from investment.
“It must tackle the real barriers we face right now,” he said. “We need to make the UK an attractive place to invest.”
(Reporting by Kylie MacLellan; Editing by Gareth Jones)
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