CBI boss warns against ‘large scale tax cuts driven by short-termism’

The boss of one of Britain’s most influential business groups has said that “large-scale” tax cuts should be kept off the table as the country gears up for an election.

Rain Newton-Smith said that companies do not want to see tax reductions “driven by short-termism” and also called for green investment to hit about £50 billion per year by the end of the decade.

At a speech in Westminster, the Confederation of British Industry (CBI) chief executive said that companies are crying out for sustainable growth in the British economy.

“The need for growth that is sustainable, not fuelled by pre-election giveaways,” Ms Newton-Smith said.

“That is predicated on a bedrock of stability. That focuses on the UK’s amazing capabilities and sets out a clear, long-term plan to make the most of them. Which we stick to. We can even call it an industrial strategy.”

In recent interviews with business leaders, the CBI found that one third of firms they spoke to felt like they had lost investments “because of UK-specific factors”.

They found that 90% of UK-owned firms “expressed a negative view about the UK as a place to invest”.

“There was a sense that without bold action, the UK’s competitiveness is slowing drifting away,” Ms Newton-Smith said.

She said that sustainable growth can only come if it also prevents creating persistently high inflation.

“As one business leader told me, they don’t want to see tax cuts driven by short-termism which leads to higher interest rates. They want stability so they can invest for the future,” Ms Newton-Smith said.

She added: “To fund our public services with an ageing population, we must keep large-scale tax cuts off the table.

“We must build resilience in our economy and society, while enabling us to play our part in mitigating climate change. And that takes investment – both public and private.”

She said that reaching the target to slash emissions to “net zero” by the middle of the century would require green investment to rise from £10 billion a year today to £50 billion per year by 2030.