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Budget needs to be relentless in pursuit of growth

The CBI has urged the Chancellor to base his forthcoming Budget on a determined pursuit of economic growth.

In its pre-Budget letter to George Osborne, the employers’ group said the Government should focus on three critical areas: boosting export performance, unleashing domestic investment spending, and removing barriers for high-growth firms.

The CBI’s specific proposals included creating a new corporate bond market for mid-caps to increase the supply of capital; speeding up the planning system to stimulate infrastructure investment; and encouraging companies to become more energy efficient by restoring the incentive element of the Carbon Reduction Commitment.

The letter also highlighted the need for changes to the tax system.

It argued that the 50p income tax rate is discouraging entrepreneurship, as, too, is the narrow definition of business assets laid by capital gains tax law.

Other measures that the CBI said would boost exports and investment are: strengthening UKTI to provide more targeted support for exporters; improving the Enterprise Investment Scheme (EIS) to bridge the funding gap for larger SMEs; and ensuring the extra support announced through the Export Credits Guarantee Department (ECGD) reaches the firms at which it is aimed.

Similarly, the CBI ‘growth’ agenda involved the reduction of business red tape.

The two-year unfair dismissal qualifying period should be restored, the CBI added, to give employers more time to assess the potential of a new employee, and the tribunals system should be strengthened to weed out weak and vexatious claims.

John Cridland, the CBI’s director-general, said: “This Budget must demonstrate a relentless focus on growth to help get the UK working again. We need an all-action Budget which boosts exports, investment and jobs.

“The Budget should create the framework for a Mittelstand of mid-cap businesses by ensuring they can access the capital they need to expand at home and abroad.

“Mobile talent needs a good reason to do business in the UK, so the Chancellor should signal a road map for reducing the 50p tax rate.

“The incentive behind the Carbon Reduction Commitment must be restored to help companies go green, and if not, it should be stopped altogether because in its current form it adds yet another cost to doing business.

“And we want to hear more about how the planning system will genuinely deliver swift decisions on infrastructure, and less about abolishing the Infrastructure Planning Commission.”