The Government's full focus must be on stirring an economic recovery, the IoD has said head of the Spending Review.
An Autumn poll of around a thousand of its members found that the vast majority (over 80%) thought the Government’s current priority should be stimulating economic growth, over reducing the size of public debt.
The Royal Charter body said that businesses needed a shot in the arm to help kindle growth as they emerge from the pandemic. Company directors polled believed that spending on digital infrastructure, followed by easing tax and employment costs and providing greater incentives for business investment, would be the best means to fuel the business recovery.
The IoD urged Government not to let coronavirus prevent it from pushing ahead with spending on infrastructure and the skills system across the UK, and warned that hiking taxes too early would be a 'bitter pill to swallow' for entrepreneurs
Tej Parikh, Chief Economist at the IoD, said:
“The Government’s full focus must be on supporting the economy through coronavirus. Directors will always want to see a sustainable approach to the public finances, but the Treasury must pay heed to the challenges facing businesses and households. Countless firms are looking ahead with apprehension, and don’t want to see costs rise and demand fall any further. Hiking taxes, particularly around capital and investment, would be a bitter pill for entrepreneurs to swallow right now. Instead, they need a shot in the arm.
“While the pandemic makes planning ahead difficult, directors are still eager for the Government to be ambitious in tackling our long-term economic challenges. The Government should use the Spending Review to lay down a marker for action in key areas like infrastructure, skills, and productivity. The more details business leaders have from Government to inform their own investment decisions, the better they can chart a way forward for their organisations."
Full survey results
958 respondents, polled between 11-30 September
To what extent do you agree with the following statement on managing the public finances? "For the time being, the Government should prioritise stimulating economic growth over reducing the deficit/level of public debt." (e.g. by raising taxes, reducing spending)
Neither agree nor disagree
Which of the following should the Government prioritise for the economic recovery?
Investing in digital infrastructure
Cutting business taxes (e.g. business rates, corporation tax)
Cutting employment costs (e.g. reducing NICs)
Providing incentives for business investment (e.g. tax credits)
Boosting the skills and training system
Supporting 'green growth'
Investing in physical infrastructure
Increasing access to finance
Restructuring coronavirus business loan debt/payments
Reducing the regulatory burden