The UK business group says fiscal clarity is needed in the Budget to support investment

Britain’s Chancellor of the Exchequer, Rachel Reeves, must strike a positive tone at her first budget on October 30 to give businesses the confidence to invest, the Confederation of British Industry said on Tuesday.

After winning a large majority in parliament on July 4, Reeves and Prime Minister Keir Starmer said the former Tory government had left a dire economic legacy, including a £22 billion ($29 billion) hole in the finances public, which they said was in the worst state since World War II.

Business and consumer sentiment weakened last month, partly due to concerns about higher taxes, and the CBI said it was important that Reeves set the right tone on October 30.

“We recognize that the chancellor is walking a fine line with limited fiscal space. While we cannot risk the economic stability that is the bedrock of growth, we must be ambitious in our vision, with the Government laying the foundations for a prosperous future,” said CBI Chief Executive Rain Newton-Smith.

Reeves said it was likely taxes would have to rise by more than Labor had planned before the election. But with Labor saying it will stick to its pledge not to raise the main rates of income tax, national insurance or value added tax, some companies are worried they will be targeted.

The CBI said Labor should set out a five-year roadmap for business taxation, including which areas could be reviewed, similar to the approach taken by the Conservative-led coalition government in 2010.

The Federation of Small Businesses, which also released a set of budget requests on Tuesday, called on Reeves to fulfill an election pledge to reform business property taxation to help small retailers and also provide a partial exemption of social security taxes, keeping pace with growth. the minimum wage.

Labor said it would keep the main corporate tax rate unchanged, but left the door open to other changes that would increase the overall tax burden.

Other areas where the CBI has called for change include greater flexibility on training courses eligible for apprenticeship funding, tax relief for green investment and healthcare expenditure for staff and a nationwide roll-out of funding for digital investment by to smaller companies.

($1 = £0.7645)

(Reporting by David Milliken; Editing by Andrew Heavens)

Photo: General view of Tower Bridge against the skyline of Canary Wharf financial district in London, Saturday, May 8, 2021. (AP Photo/Alberto Pezzali)