The IMF downgraded its forecasts for Britain, warning it is likely to fare worse than similar developed economies and that taxes are rising faster than in any other developed nation under Labour, according to the IMF.
High energy costs are hitting UK industry. According to Daily Mail - Money, Rain Newton-Smith, chief executive of the CBI, said electricity prices for UK industry are around 60 per cent higher than other advanced economies. Policy costs make up around 20 per cent of electricity costs for an average medium-sized business, she added. Major media reports indicate that US giant OpenAI put on hold plans for a data centre in the UK, citing high energy costs.
Policy costs are making our businesses uncompetitive and vulnerable in a crisis. Before the war in Iran, we already had very elevated energy costs for firms. Electricity prices for industry are around 60 per cent higher than other advanced economies.
The CBI says the business rates system is a 'growth killer' and a major brake on investment. According to a CBI survey, 32 per cent of firms have cancelled, reduced or delayed investment in their properties because of the system, while 30 per cent said they would reinvest at least £9 in every £10 saved from lower rates. According to Daily Mail - Money, Louise Hellem, CBI chief economist, described how a single refurbishment can trigger a 40 per cent increase in rateable value, or a £1 change can move a firm from one band to another and add £39,000 to their bill. UK Hospitality reports that the average business rates bill for hotels will rise 115 per cent over the next three years, a total of £205,200.
Employers' national insurance bills jumped by £28 billion or 24 per cent last year after the Chancellor raised the tax rate, according to UHY Hacker Young. According to Daily Mail - Money, Phil Kinzett-Evans, a partner at UHY Hacker Young, described the level of tax in the UK as too high and called for a reduction in the business tax burden.
Rightly, there has been a lot of focus on households but we don't hear enough about how businesses are impacted by those high energy costs. We are saying to the Government to use this moment to think about lasting solutions. We could take policy costs off electricity bills for industry. For an average medium size business, these are around 20 per cent of the electricity costs they face.
It's now fairly widely recognised that the level of tax in the UK has got too high. Businesses need to see a sensible economic plan that sees a reduction in the business tax burden.
Business rates are no longer just a cost of doing business – they're a major tax on ambition and one that effectively penalises investment. When a single refurbishment can trigger a 40 per cent increase in rateable value, or a £1 change can move a firm from one band to another and add £39,000 to their bill, the system is clearly not fit for purpose in a competitive, modern economy. That uncertainty is a growth killer, with vital projects being delayed, scaled back or cancelled. Businesses are clear that, if the burden of business rates were reduced, savings