Business will go into “hibernation” in a “decade of no growth” unless chancellor Jeremy Hunt matches tax rises in the upcoming mini-Budget with moves to relax rules on immigration, planning and regulations, the CBI has warned.
Failure to take action to tackle labour shortages will be “damaging in the short and long term”, the business organisation’s director general Tony Danker said.
He also added that without changes that will make recruiting from abroad easier and speed up planning decisions on major projects, many companies will simply halt investment plans over the coming years.
Mr Danker warned that Brexiteer plans – backed by prime minister Rishi Sunak – to review or repeal EU-derived laws will make “no positive difference” to most companies.
Mr Hunt is expected to use Thursday’s statement to announce a package of tax rises and public spending cuts designed to fill a hole of up to £60bn in the nation’s finances.
He said on Sunday that everybody can expect to face tax increases as he seeks to make the coming recession as “short and shallow” as possible.
Mr Danker said: “The Autumn Statement will need to deliver the market stability the new prime minister and chancellor have pledged since taking office. But while I have no problem with tough choices to deliver stability, I do worry that the government won’t take tough choices to deliver growth.
“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.”
Mr Danker added: “The chancellor has said he will set out a plan for growth on Thursday. But if this is only warm words and aspirations it won’t stop businesses pulling back from investment. It must tackle the real barriers we face right now.
“A desperate lack of workers is inflating wages and stopping firms growing. Our planning rules allow local officials to hamper major projects we need. Our regulatory regime doesn’t do enough to incentivise investment and innovation.
“It is far more important to change that than partisan efforts to simply repeal EU laws – which won’t make any positive difference to most firms.”
Mr Danker said that the government’s mini-Budget in September had put many global firms off investing in the UK.
It was now vital to make Britain “an attractive place to invest” both for international and domestic companies, he said.
“In the past three weeks I have talked to hundreds of firms who need to decide this month whether to invest for next year or whether to go into hibernation in fear of predicted recession and no action from policymakers,” said Mr Danker.
“There are real opportunities for growth in Britain next year. These obviously can’t now be achieved from a major stimulus package, but nor can government believe that warm words alone will give firms confidence.”