CBI calls for £6 billion boost to public spending

Industry leaders in the UK have called on the government to increase public spending on infrastructure projects following the EU referendum vote in June.

UK infrastructure CBI proposes gov increase spending
British industry leaders are calling on the government to increase public spending on infrastructure projects by £6 billion a year to boost economic growth in the wake of the referendum vote to leave the European Union.The Confederation of British Industry (CBI) published its proposals on Thursday for what it would like to see in next month's Autumn Statement, in which Chancellor of the Exchequer Philip Hammond will set out the new government's spending plans."The chancellor should lay foundations allowing firms to navigate a more uncertain economic outlook, invest for the future and get all regions firing on all cylinders," said the CBI. "Rarely has there been a more important Autumn Statement."While the economy has shown resilience in the months since the vote to leave the EU, economic uncertainty continues over the UK’s future relationship with the EU and its impact on firms’ investment plans. In the short-term, the government needs to stimulate confidence and investment, while over the longer-term, balance productivity growth across all regions with an ambitious plan for infrastructure investment."

CBI propose public spending increase

The CBI is proposing an increase in public spending to two per cent of GDP, instead of the current fall to 1.7 per cent forecast by 2020. This would increase public investment by £6 billion a year, much of which would be spent on transport infrastructure.

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Government must incentivise businesses to invest

Carolyn Fairbairn, CBI director-general, said, “The chancellor should capitalise on the UK’s core strengths, setting out a pro-enterprise agenda that instils confidence and kick starts investment.“With huge variations in productivity between different parts of the country, the top priority must be to set out a programme that will get our regions firing on all cylinders and supports businesses to innovate, invest and create jobs in the years ahead. “Amid economic uncertainty, it’s important that the government does what it can to incentivise businesses to invest today, rather than postpone until tomorrow. Increasing the Annual Investment Allowance to £1 million until the end of 2018 and removing new plant and machinery investments from business rate calculations would make a real difference.“With interest rates at rock bottom, now is the time for the UK to put serious effort into improving our creaking infrastructure. We would like to see £6 billion more spent each year on public investment: improving our transport and digital network, building more homes and extending regional funding. This can be achieved by increasing Public Sector Net Investment to two per cent and delivering on previous infrastructure project commitments. “If the UK is to be at the top of the global game on business innovation, we need a comprehensive industrial strategy that capitalises on the UK’s core economic strengths. We should also embolden those firms who not only carry out research for new products in the UK, but also develop them here by enhancing R&D tax credits by 50 per cent.“A stable and competitive tax system is vital to the UK maintaining its international reputation as a great place to do business. To create stability, the chancellor should set a high bar for tax changes, focusing on targeted measures that address the current economic challenges: supporting investment and productivity growth.”

Small changes could encourage investment

Rain Newton-Smith, the CBI’s chief economist, said small changes to business rates could also encourage investment. Under current rules, spending on solar panels and machinery can be counted as improvements to business premises, triggering extra business rates. She said the £200,000 annual investment allowance should be raised to £1m until the end of 2018 “to increase the attractiveness of near-term investment”.

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