The Confederation of British Industry (CBI) has called the changes announced in the July 2015 ‘double edged’.
John Cridland, who is the Director-General of the CBI, released a press release that details the organisations response to each business related change. He was positive about some of the changes, but explained that others would raise issues for UK based firms.
He was particularly supportive of the Chancellor’s plans to reduce the deficit. On this subject he said:
“Firms have been unwavering in their support for the Chancellor’s deficit reduction plans and will welcome the clarity that the new fiscal rules provide. Other standout measures include making the Annual Investment Allowance permanent at £200,000, which the CBI called for.”
The reduction in corporation tax was particularly welcome. However, Cridland expressed concerns about the introduction of the National Minimum Wage of £7.20. Firms who pay the current minimum wage will need to find an additional 7% for wages. The worry is that the tax reductions that have been announced will not cover all of that additional cost.
Cridland pointed out that CBI members support the idea of a higher skilled and higher wage economy, but it was concerned about how companies could pay for this. The setting up of new enterprise zones was also welcome. Firms are now more confident and investing to grow, but access to finance is still an issue for many companies.
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