The Confederation of British Industry has called on the Chancellor to prioritise measures that will boost business investment and trade when he delivers his Budget later this month.
The business group expects robust economic growth this year and next, but has warned of the need to rebalance away from consumption to secure a sustainable recovery.
The CBI has unveiled its own proposals for the March 19 Budget including the introduction of a package which encourages investment in energy generation and helps businesses struggling with high energy costs.
It has warned that the UK’s long-term energy investment needs must be balanced against the costs borne by businesses and households.
It says that a ‘robust’ EU carbon price is necessary to incentivise investment, saying that British businesses, especially those that are energy-intensive and are operating internationally, are currently at a disadvantage.
It has also called for an extension of the £250,000 Annual Investment Allowance for smaller firms beyond 2015 which it says will boost capital spending in plant and machinery which is currently below the EU average.
The CBI has also said that the successful Seed Enterprise Investment Scheme (SEIS) – which was introduced to support the launch of more start-up businesses by offering investors tax breaks– should be made permanent.
It also wants to see the introduction of a capital allowance for structures and buildings, to encourage investment in ‘critical’ areas like energy infrastructure. It says that the UK ‘continues to be let down’ by a historic under-investment in infrastructure, which is deterred by the lower returns on structures and buildings than in other countries.
The organisation is also lending its voice to calls for the freezing of Air Passenger Duty, which is the highest in the EU, and review the system, especially for long-haul flights where the CBI says that the levy is the most distortive.
Its director-general John Cridland said: “To successfully rebalance our economy we need to give businesses a leg up to invest in new equipment and to sell more of their goods and services around the world.
“The economic recovery is taking hold with businesses and consumers both feeling more confident but we must make sure that it really takes root and this can only be done through rebalancing.
“There are encouraging signs that business investment and net trade are on the up and now is the perfect time for the Government to get full square behind it, particularly in the case of smaller firms.
“Above all, British businesses must have secure and affordable energy that enables them to compete internationally and keep jobs in the UK.”
The CBI has also called on the Government to maintain the pensions’ income tax relief and the tax-free lump sum and the NICs relief on employer pension contributions, which its says encourages employers to go beyond the statutory minimum.