By Charlie Conchie
A new government must prune the UK’s sprawling tax system and refresh “Brand Britain” if the country is to boost investment and restore its status as a global hub for business, the country’s top business body has said.
In its “business manifesto” today, the Confederation of British Industry (CBI) laid out a list of demands to both parties and said that an incoming government needed to “revitalise the investor pitch” for the country and “redefine the UK’s growth trajectory” within 100 days of taking power.
“A new government of whatever colour provides an opportunity to shift gear and prioritise the long-term decisions that can deliver a decade of sustainable growth,” said Rain Newton-Smith, the CBI’s chief executive.
“Top of the in-tray should be sharpening the investor pitch for ‘Brand Britain’ – ensuring we are at the very top of the league table when it comes to investment.”
The UK economy has been buffeted by “one-off shocks” in the past four years and ministers now needed to develop a “credible plan to crowd in private sector investment and deliver sustainable growth”, she added.
Among its list of requests, the CBI said any new government needed to create a tax environment that drives investment, transform the planning system and introduce policies to boost the labour market and productivity within 100 days of taking office.
Central to lifting productivity would be policies to expand tax-free occupational health support and helping prevent employees leaving the labour market, the CBI said.
The comments point to the productivity puzzle that has plagued the British economy in the period since the financial crisis, in which UK output has flatlined and global peers have steamed ahead.
According to the government figures of GDP per hour worked, the UK came fourth highest out of the G7 countries, around 16 per cent below the US and Germany.
Britain has also been struggling to attract foreign direct investment since the Brexit vote in 2016. According to the latest government figures released last year, investment has slumped around 30 per cent between a 2016-2017 peak and 2022-2023.
Business investment in the UK economy has essentially flat-lined as a share of GDP since 2000, meaning the UK has fallen behind its global peers.
If business investment had matched the average of France, Germany and the US since the financial crisis, GDP would be nearly four per cent higher today, according to the Resolution Foundation.
In its manifesto today, the CBI said growth across the next parliament will come “squarely off the back of the private sector” and the “defining challenge” for a new government will be reviving investment levels and encouraging business to invest domestically again.
“Firms can now see some bright spots emerging in the UK economy,” Newton Smith added. “But the challenges are persistent: sluggish productivity growth, underperforming business investment compared to our international counterparts, and ongoing labour and skills shortages.”
