LONDON’S BUSINESS NEWSPAPER
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LOST DECADE WORRY FOR UK ECONOMY
MONDAY 5 DECEMBER 2022
ISSUE 3,902
CITYAM.COM
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INVESTMENT RELIEF COULD TURN THE TIDE, SAYS CBI JACK BARNETT THE UK risks another “lost decade of growth” unless the government takes action to strengthen companies’ confidence in the economy, the country’s top business group warned overnight. Rishi Sunak must create an environment that incentivises business investment to avoid prolonging the UK’s growth malaise since the financial crisis, according to the Confederation of British Industry (CBI). The alert has been sparked by the organisation’s latest set of economic forecasts revealing the UK is already in a recession that will last until the end of next year. That long slump has shaved 1.4 percentage points off the CBI’s GDP projections and the group now thinks the economy will contract 0.4 per cent in 2023. Creating a permanent successor to the 130 per cent investment relief scheme would lift growth out of the gutter
and help the economy bat away future supply shocks, the CBI said. Separate figures from consultancy BDO last night show businesses agree with the CBI’s assessment. Nearly half of British firms are concerned about being unable to source materials due to supply chains breaking down. Ramping up investment incentives could help businesses expand capital stock, limiting their exposure to international trade disruption. Stimulating investment improves an economy’s long-term health by increasing the amount of goods and services it can produce. “Britain is in stagflation – with rocketing inflation, negative growth, falling productivity and business investment,” Tony Danker (left), director general of the lobby group, said. Firms see potential growth opportunities but a lack of “reasons to believe” in the face
of headwinds is causing them to pause investing in 2023, he said. “Government can change this,” he added. Sunak and Chancellor Jeremy Hunt last month heaped pressure on firms’ balance sheets by launching a near £6bn national insurance tax grab. They also confirmed the super deduction investment allowance will end next spring. Under current fiscal policy, the CBI reckons business investment is on track to be nine per cent lower compared to its pre-Covid-19 crisis trend. Unless Sunak and Hunt return to the dispatch box with policies to trigger an investment boom to reverse years of chronically poor productivity improvements, the UK economy will by the end of the CBI’s forecast period be 27 per cent smaller compared to its pre-financial crisis trend. A Treasury spokesperson told City A.M.: “We have been honest that there are tough times ahead for the UK economy in the face of strong global headwinds, and we are not alone in that challenge.”
THREE LIONS ROAR ON England set up World Cup tie with France MATT HARDY ENGLAND will play defending champions France in the World Cup quarter-finals on Saturday after a clinical Three Lions side overcame a stubborn Senegal outfit 3-0 last night at the Al Bayt Stadium in Qatar. In a nervy match against the current champions of Africa, England netted twice in the opening half before adding a third in the second period. Jordan Henderson scored the opener against the run of play when the Liverpool midfielder got on the
end of a superb Jude Bellingham ball before Harry Kane grabbed his first goal of the tournament. It came after a storming Bellingham run allowed Phil Foden to find the Tottenham frontman in space. Bukayo Saka made it three early on in the second half with a chip over Chelsea goalkeeper Edouard Mendy. The victory hands Gareth Southgate’s England a difficult last eight tie with current holders Les Bleus next weekend. £ SPORT: PAGE 26
Currys gets spicy as chief exec hits out at ‘free ride’ Amazon over taxation JACK BARNETT AMAZON is enjoying a “free ride” paid for by UK retailers by using the country’s infrastructure while swerving taxes, the head of high street electronics retailer Currys said yesterday. Currys boss Alex Baldock told the
BBC’s Sunday with Laura Kuenssberg show Amazon “appear[s] to play by different rules than those of us who actually pay some tax”. The online retail giant has been accused of reducing its UK tax bills by sticking to a primarily digital footprint. It does pay tax on distribution warehouses.
Bricks-and-mortar retailers are more exposed to the UK tax system than digital players. Business rates are a tax on physical commercial spaces. Amazon’s warehouses are predominantly based in lower-value, out of town areas. High street retailers have called on the government to tax online
marketplaces’ sales to help level the playing field, but plans for an online sales tax have been ditched. Amazon said they were among the top 15 largest private sector taxpayers in the UK. Baldock also confirmed reports that Currys has ditched Royal Mail for deliveries “for now” to avoid
strike-related disruption. “Obviously our first responsibility is to the four in five UK households who want to get hold of their technology,” he said. A Royal Mail spokesperson told City A.M. “industrial action [is] undermin[ing] the trust of our customers”.
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