As speculation mounts concerning the November budget the Institute of Chartered Accountants in England and Wales (ICAEW) an organisation not known for hyperbole has issued a bleak forecast to the Government about a dystopian future should it decide to bash the business world further with more tax increases. The ICAEW, whose members advise over three million UK businesses, is urging the Chancellor to confirm an iron-clad commitment to end uncertainty and make ‘doing business’ easier.
British firms plan to axe jobs, raise prices and slash investment if further tax rises are announced at next month’s Budget, Institute of Chartered Accountants in England and Wales (ICAEW) CEO Alan Vallance has told business leaders drawing on the findings of new research.
In a speech to an audience of leading chartered accountant members and other business leaders at ICAEW’s flagship Annual Conference in central London, Vallance said that the uncertainty, difficulty and cost of doing business is holding back growth in Britain.
Vallance challenged the government to prove it is firmly on the side of enterprise by giving businesses what they need to invest, hire and innovate, as he unveiled a survey of 659 business leaders showing the likely impact of further tax rises in next month’s Budget:
The research found that over half of businesses (56 percent) would respond to further tax rises in next month’s Budget by cutting staff or freezing recruitment, while one in two (45 percent) would consider raising prices and two-fifths (39 percent) would reduce investment. Around two-thirds (64 percent) of firms would look to partly absorb the impact of these higher costs through lower profit margins, likely to further weaken business confidence.
This comes after 80 percent of businesses said they were negatively impacted by April’s major rise in business costs, notably the increase in national insurance, while nearly a quarter said the impact on their company was “very negative”.
Nearly half (46 percent) of firms responded by cutting jobs or freezing recruitment, a third (34 percent) increased prices and more than one in five (23 percent) reduced investment.
The ICAEW – whose members advise over three million UK businesses – called on the Chancellor to use next month’s Budget to boost confidence and unlock economic growth. Confirming a three point wish-list, Vallance called on the Government to end uncertainty courtesy of an iron-clad commitment to no further business tax increases this parliament and the publishing of a long-term tax roadmap; making doing business easier, including starting a consultation on a path to a single rate of VAT with minimal exemptions and cutting the cost of doing business, notably through reforming or replacing business rates with a system that encourages businesses to invest in growth and improved productivity.
In his conference speech, Alan Vallance said: “Policymakers talk a lot about growth, but the businesses trying to deliver it are being held back.
“Businesses face too much uncertainty with frequent rule changes and mixed messages on tax making planning impossible, leaving firms wary of making long-term investments. Complex VAT systems, and ever-dwindling HMRC service standards continue to help make it too difficult to do business.”
He added: “Firms also tell us it’s too expensive to do business, with confidence in free-fall over skyrocketing operating costs amid high taxes, an outdated business rates system and soaring energy bills.
“The UK now finds itself at an economic inflection point ahead of a crunch Budget. We know that businesses stand ready to drive growth forward, and will do so once they’re given the tools, incentives and opportunities.”
Commenting on the survey results, Vallance confirmed: “Tax is holding back growth, so it’s only natural that growing fears over more tax hikes in November are choking off investment, hiring and innovation. The reality is that Britain faces a damaging cliff edge if the Chancellor decides to raid businesses again at next month’s Budget.”
“Business confidence is fragile, investment is stalling, and everyday decisions are being slowed by complexity, cost and uncertainty. If the UK is to deliver on its growth mission, it’s time to give businesses what they need to make it happen.”
Costs high, confidence low
Alan Vallance said……. “Firms also tell us it’s too expensive to do business, with confidence in free-fall over skyrocketing operating costs amid high taxes, an outdated business rates system and soaring energy bills. The UK now finds itself at an economic inflection point ahead of a crunch Budget……
