British business is calling on the Government to help get the “flywheel of the economy turning” with concrete strategies and policies as official output figures are expected to show a difficult end to 2024.
Rupert Soames, chairman of the CBI business group, will say on Thursday that the Government’s growth ambitions must be matched with action and that business confidence must be restored to spur on investment needed to support expansion.
At a CBI Midlands business dinner event in Birmingham, he will say: “There is not a business leader I have spoken to who does not wish the Government well in its ambition.”
But he will add that slogans such as “growth, growth, growth” must be backed by action on strategy and policy.
“To get growth going, we must get the flywheel of the economy turning,” he will say.
“Up and down the country businesses need to increase the rate of investment in growth, and they will only do that if they have confidence government policy will support them.
“In particular they need to see regulation such as planning become much more growth-friendly, and not to do anything to discourage employment,” he will say.
Figures for gross domestic product (GDP) from the Office for National Statistics on Thursday morning are set to reveal a downbeat final quarter for the economy.
The Bank of England warned last week that it expects GDP to contract by 0.1% in the fourth quarter of 2024, following zero growth in the previous three months.
This will leave annual GDP growth at a paltry 0.7%, according to analysts – far below initial forecasts from the start of the year.
It will likely reinforce fears over stagnation, which is a potent combination of zero growth and high inflation.
The Bank predicted last week that inflation would rise back up again and peak at a higher-than-expected 3.7% later in the summer.
Chancellor Rachel Reeves has made it her mission to see the economy grow, but there are fears that her move to hike national insurance contributions and the minimum wage will see businesses raise prices and slash jobs.
The CBI is urging the Government to work with British firms to help gain back their trust.
Mr Soames will say: “The Budget may have worked to fill a hole in the public finances by significantly increasing taxes on business, but in filling one hole it has created another – in the confidence and trust of business… this is not conducive for encouraging businesses to invest.
“To restore business confidence, this government must make sure its policies… truly hang together in a way that makes sense for business.”
Economists fear that anaemic growth is set to continue throughout the first half of 2025.
Ellie Henderson, at Investec, said: “We do not see a stark change of affairs in the immediate future, with only modest growth pencilled in for much of the first half of this year.”
But she said the Government’s pro-growth agenda should help buoy activity.
She said: “Should some of the reforms involved in this start to bear fruit, we could see a lift in economic optimism in the UK moving forward.
“And even if it takes time to complete some of the longer-term projects, the investment that is needed to deliver them will add to growth in the interim.”
