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CBI boss warns Jeremy Hunt has no plan for growth – business live | Business

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The CBI conference takes place against reports that the UK could seek a Swiss-style deal with Brussels, my colleagues Aubrey Allegretti and Lisa O’Carroll write.

Ahead of the prime minister’s address to business leaders in Birmingham on Monday morning, Downing Street tried to dampen down speculation that a deal similar to Theresa May’s “Chequers” plan could be adopted, claiming it was “categorically untrue”.

There has been renewed focus on the effects of Brexit given the UK is the only G7 country still lagging behind pre-pandemic growth levels, and the chancellor, Jeremy Hunt, recently suggested that removing trade barriers would boost growth.

Senior government figures were said by the Sunday Times to be revisiting a Brexit trading arrangement offered by the EU last year, which would get rid of 80% of the checks between Great Britain and Northern Ireland and open up access to the single market.

But the move would require the UK to pledge alignment, at least temporarily, on food and agriculture standards. Doing so would be anathema to champions of a hard Brexit, including Boris Johnson’s chief negotiator David Frost, as well as MP

Danker will also urge ministers to resolve the festering row over the Northern Ireland protocol, to boost trade.

He’ll say:

Right now, our trade as a percentage of GDP is the lowest in the G7.

Boris Johnson achieved a deal with the EU that allows us to continue to trade tariff- and quota-free with our biggest trading partner. There’s some good stuff in there. Currently locked up.

“But still, we argue over the Northern Ireland Protocol. Still, we argue over sovereignty. Get round the table; do the deal; unlock the TCA. I say to Brexiteers, the best guarantor of Brexit is an economy that grows. Its biggest risk is one that doesn’t.

“Now I know that some of these things will not be popular with politicians. But while, I have no problem with Government taking tough choices to bring stability, I want them to also take tough choices for growth.

Rishi Sunak promised Joe Biden last week that a deal will be reached with the EU over the Northern Ireland protocol – which regulates trade between Great Britain and Northern Ireland – will be reached in time of the 25th anniversary of the Good Friday agreement next year.

Tony Danker is also expected to lay out a three-pronged approach to prod the economy into higher growth.

Here are the likely key points:

1) He wants the government to be the “great unlocker of private sector investment”.

Many business groups are disappointed that Jeremy Hunt didn’t extend the super-deduction allowance, introduced by Rishi Sunak, which provided 130% relief on purchases of equipment, beyond next April.

Danker will argue that Hunt should have maintained this incentive – rather than simply hitting business with higher taxes, saying:

When Rishi told me he was announcing the super-deduction alongside the increase in corporation tax, the principle was clear. If you choose as a firm to invest less and make a bigger profit today, that is your choice. But you’ll pay more tax. If you choose to invest more in your long-term future, and that of the UK – you’ll pay less.

“Corporation tax rates will jump 6 points overnight in April – but now without the incentives – yet that principle should be staying the same. CBI analysis shows that a permanent full allowances regime alongside that jump – would unlock an extra £50bn in capital investment per year by the end of the decade. The Government should have taken this path.

He’ll also argue that the government should use its balance sheet to help build industries such as hydrogen and Sustainable Aviation Fuel.

2) Government must “change economic rules” to overcome political barriers.

Danker will call for economic migration in areas where firms can’t find people with the right skills, as well as the removal of regulatory barriers holding back growth, and reform of the planning system.

3.) Businesses must show even greater ingenuity.

Danker will argue:

You here in this room. Entrepreneurs, business owners, growing businesses, multinationals. In the past two years you have shown more resilience, imagination, bravery and agility than ever. The bad news is you can’t take a break. Greater business ingenuity has to become the new normal for UK plc.

Introduction: CBI to warn Hunt lacks growth plan

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

A chill is gripping the economy after chancellor Jeremy Hunt bluntly laid out a future of low growth, high taxation and a record fall in living standards in last week’s autumn statement.

UK faces record fall in living standards

Hunt’s £55bn package of spending cuts and tax rises may have calmed the markets, but it was conspicuously light on measures to boost the economy.

And today, Britain’s top business leaders will hear that Hunt’s statement has failed to address the UK’s fundamental growth problem. They’re gathering in Birmingham for the CBI Annual Conference, where CBI director-general Tony Danker will warn that people’s lives will get worse without a push on growth.

Danker (who had praised the pro-growth measures in the ill-fated mini-budget) will applaud Hunt’s efforts to get inflation down, but warn that the growth part of the puzzle is missing.

He’s expected to say:

The painful reality about growth is that it can’t be stimulated overnight. That’s what the mini budget got wrong. Across the board tax cuts. Immediate demand stimulus. Relying on the old British strength − consumption − at the expense of the perennial British weakness − investment − has given growth a bad name.

“But growth is good. Growth is a precondition to a stable society. Without growth the NHS gets worse not better. People’s lives get worse not better. And we lack the resources we need to transform ourselves to a zero-carbon world.

“Yet Britain’s had 15 years of low growth and flatlining productivity. We can’t afford a repeat.

UK tax rising plan

The Office for Budget Responsibility forecast last week that the UK has fallen into a recession that will last for over a year, with GDP expected to shrink by 1.4% in 2023.

The real incomes squeeze tips the economy into a recession lasting just over a year. GDP falls by 2%, doesn’t return to its pre-pandemic level until late 2024, and cumulative growth is over 3ppts lower by 2027 than we forecast in March.#AutumnStatement pic.twitter.com/xPZOmA1tpP

— Office for Budget Responsibility (@OBR_UK) November 17, 2022

That’s only half the problem; Danker will also warn that Britain is in the middle of stagflation – hit with rocketing inflation as well as negative growth.

Policymakers can’t just choose to fight one or the other, he’ll argue:

“The predictable reaction is to choose which ‘evil’ is worst. But that just leads to different kinds of problem. Ignore inflation to get growth going and we’ve seen what happens. Immediate trauma. Ignore growth to get inflation down?

Prolonged pain. I reject the idea that you have to choose. I say you daren’t choose.

The OBR reckons that inflation may be peaking – but price pressures will remain intense for many months more before finally easing towards the end of next year.

Inflation is forecast to peak at a 40-year high of 11.1% this quarter due to higher global energy and food prices. Without the energy price guarantee, it would have peaked at 13.6% a quarter later. pic.twitter.com/MIKIpoS9xv

— Office for Budget Responsibility (@OBR_UK) November 17, 2022

Danker rolled the pitch on Sunday, telling the BBC that Hunt’s statement had been “all about fighting inflation and getting the government budget in some decent shape and that does need to be done”.

But he added that:

There was really nothing there that tells us the economy is going to avoid another decade of low productivity and low growth”.

Danker will give his speech at 10am, followed by Rishi Sunak. He shouldn’t struggle improve on Boris Johnson’s effort last year, when the then-PM stumbled through his speech, hailed Peppa Pig World, and delivered a grunting impression of an acceleratinng car.

Top economists will give their verdict on the autumn statement to MPs this afternoon.

The Treasury committee will hear from Dr Linda Yueh, Fellow of St Edmund Hall, Oxford University, Mike Brewer, chief economist of Resolution Foundation, Samuel Tombs, chief UK economist of Pantheon Economics, and Carl Emmerson, deputy director of the Institute for Fiscal Studies.

Financial markets are edgy, as investors fret about fresh Covid-19 restrictions in China.

Beijing’s most populous district is urging residents to stay at home today after a rise in caes, with at least one district in Guangzhou being locked down for five days.

¡Buenos días! Así vienen las bolsas europeas:#FTSE 7378 -0.21%#DAX 14405 -0.37%#CAC 6638 -0.27%#IBEX 8087 -0.23%#STOXX 3914 -0.38%

— Último minuto (Financial Markets) (@ultimominutoOTC) November 21, 2022

The agenda

  • 9am GMT: Jon Cunliffe: Keynote speech on ‘The Challenges & Opportunities for Policy Makers’ from digital currencies.

  • 10am GMT: Director-general Tony Danker speech to CBI annual conference

  • 10.15am GMT: PM Rishi Sunak to address CBI annual conference

  • 3.15pm GMT: Treasury committee hearing on the autumn statement

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