Rishi Sunak must now cut corporate taxes to save the economy from recession, the Confederation of British Industry has warned, as the cost of living crisis derails the Covid recovery.
The Chancellor has promised that “we will launch a series of tax cuts in the autumn”, but Tony Danker, the group’s chief executive, said it was too late and the government must act now.
He said: “We already have a cost-of-living crisis. Are we really going to wait for a full blown recession before the government starts to get a handle on this?
“The government must now sum this up and reflect on the range of measures, big and small, that will boost business confidence and investment. We need trade tax cuts.”
Traditionally, the chancellor intends to only make major tax and spending announcements at the annual budget and spring declarations, but this year the intensity of the cost-of-living crisis and the pace at which it has gripped the economy has forced Mr Sunak to catch up.
These included community tax breaks and an energy bill loan, announced in February ahead of the war in Ukraine and more than a month ahead of the spring declaration, followed by another bill help announcement last month.
Pressure is already mounting for more household support and tax breaks, which the CBI wants to use to sustain investment growth and improve the economy’s long-term prospects.
The CBI has lowered its growth forecasts as rampant inflation erodes family finances and “pushes households into recession”, with only the recovery in business investment keeping the economy from sliding into a formal recession, usually described as two consecutive quarters of contracting GDP is defined.
The economy is expected to grow 3.7 percent this year and just 1 percent next year, compared to previous forecasts of 5.1 percent and 3 percent, respectively.
Mr Danker said: “We expect the economy to be fairly stagnant. It doesn’t take much to push us into a recession. And even if we don’t, too many people will feel that way.”
https://www.telegraph.co.uk/business/2022/06/12/big-business-warns-rishi-sunak-get-grip-tax-recession-strikes/ Big business warns Rishi Sunak to get a grip on tax before recession strikes