Spring Statement: BCC Reaction
Commenting on the Spring Statement, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: “The Chancellor is right to warn of the risks that a messy and disorderly exit on March 29th would pose for the economy. Westminster must heed the fact that businesses and government agencies are simply not ready for such an abrupt change, and Parliament must take concrete action tonight and in the coming days to avoid no-deal in just over a fortnight.” Commenting on the latest forecasts by the Office for Budget Responsibility, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “The OBR’s forecasts for the Spring Statement indicate a more downbeat outlook for the UK economy with GDP growth now projected to be lower in 2019 compared to their previous forecast. The significantly downgrade to the OBR’s forecast for business investment growth is a key concern, as weak investment levels significantly limit the UK’s productivity and growth trajectory. In contrast, the UK labour market is forecast to remain a key source of strength for the UK economy. The OBR is right to highlight the risk of a messy and disorderly exit from the EU as such an outcome would likely lead to a significant deterioration in economic conditions. “OBR has also confirmed that the UK’s fiscal outlook has improved since the Autumn Budget. However, if the UK economy remains stuck on its current low growth trajectory then it may struggle to continue to achieve the level of tax receipts needed to achieve a substantial reduction in the deficit – leaving the Chancellor with more of a fiscal headache than the OBR’s latest outlook suggests. “Against this backdrop, the focus of the Spending Review and Autumn budget later this year must be on fixing the fundamentals here at home from productivity and skills, to digital and physical infrastructure, to enable businesses to drive UK economic activity through Brexit and beyond.” On lack of action on Making Tax Digital, Suren added: “Business communities across the UK will view the lack of action to ease the administrative and cost burden related to the introduction of Making Tax Digital as a major misstep by the government. Our Chamber research shows that with only a matter of weeks to go there still isn’t sufficient understanding or preparation among businesses to make its rollout a success right now. “While steps have been taken to have a light touch approach to penalties in the first year of implementation, businesses will want to know how this will work in practice and seek reassurances that HMRC’s already stretched resources will be able to cope with supporting businesses through such a fundamental change to the tax system.” On the announcement of the start date of the reduction of apprenticeship levy co-funding rule, Jane Gratton, Head of Skills at the BCC said: “We have spent months pushing ministers to make practical changes to the way the apprenticeship system works, and this is an important step in the right direction. Reducing the co-investment costs for employers will encourage more firms to take on new talent, and train and upskill their wider workforce. “But the inflexibility of the apprenticeship levy means there’s still not enough training taking place in businesses, and this will hamper efforts to boost productivity. We’re unlikely to see training volumes increase until there is significant reform of the system.”