Exclusive

Chancellor must ‘stimulate recovery, not stifle it’, business leaders tell LBC

28 February 2021, 11:39 | Updated: 28 February 2021, 11:44

CBI head: Tax hikes could hamper UK's Covid recovery

By Joe Cook

Chancellor Rishi Sunak must use his budget on Wednesday to “stimulate the recovery rather than stifle it” and avoid “knee-jerk tax increases”, business leaders have told LBC.

Speaking exclusively to Swarbrick on Sunday, Director General of the Confederation of British Industry Tony Danker, said he thinks Wednesday’s announcement is “going to be a blockbuster of a budget”.

Amidst reports that Rishi Sunak may increase some taxes to tackle the huge debts incurred during the pandemic, Mr Danker warned this could harm business confidence and growth.

Pressed on the possibility of higher taxes, the CBI leader said: “If your question is do we think that businesses and the wealthier in society should be paying more tax overtime, once the economy is growing, in order to help tackle the debt: absolutely.

“I think it is risky to do that now. We don’t have a reopening let alone a recovery. The objective has to be stimulating business confidence, investment, growth and jobs. So I would be cautious about doing that now."

"That is the real test of the budget and I hope we stimulate the recovery rather than stifle it."

Read more: Rishi Sunak says UK economy will face 'enormous strains' post-lockdown

Read more: Whole families with schoolchildren to be offered home tests twice weekly

Anneliese Dodds: Tax hikes 'not a sensible way forward'

He added: “I just hope on Wednesday, we come out of the budget saying ‘You know what? I think the economy is going to roar this year.’

“Then obviously once the economy starts roaring we all have to turn our minds to how we bring down the debt.”

Also speaking to LBC’s Swarbrick on Sunday, Luke Johnson, Chairman of Gail's Artisan Bakery and the Brighton Pier Group, said the chancellor must avoid “knee-jerk tax increases that will discourage people from taking a risk” and growing businesses.

Read more: Failing to support people in self-isolation 'biggest risk to the roadmap,' Burnham warns

Read more: Covid vaccine rollout: Kate and William urge people to 'keep it going' and get a jab

Sunak must steer clear of 'knee-jerk' tax hikes

Mr Johnson said he recognised there is “a lot of repair work to be done, both for the economy as a whole and for the national finances”, but that the long term recovery must address structural issues that have been put off for years.

“I think in a way, we can question the old assumptions and say things cannot carry on as before, using excuses to address underlying problems,” he explained.

"In, for example, the tax system, we need to tax passive gains and we need to reward those that create employment and take risks and innovate.”

Read more: Over-60s in England to be invited for Covid-19 jab from Monday

Read more: Military should step up ‘more often’ in UK crisis response, General Sir Nick Carter tells LBC

Luke Johnson: 'We need to tax passive gains'

The former Pizza Express chairman said did not “at all” think capital gains tax should go up for “those who are making the gains are taking the risk and innovating and creating jobs”.

However, he called on the chancellor to increase capital gains tax on things such as property, questioning “why everyone should make a free capital gain on their home when they sell it”.

Mr Johnson also said he felt the government’s announcement of £5 billion in “restart” grants for businesses hit hardest by the lockdown was part of “shorter term measures” that are not “addressing the structural problems”.

Instead, he called on the chancellor to “promise” to initiate a “complete reform” of business rates, which he argued creates an “unfair burden on high streets... that helps destroy communities and kill jobs.”

More Latest News

See more More Latest News

Donald Trump and Vladimir Putin have reportedly shared their first phone call since the election.

US ‘could recognise Crimea as Russian in peace deal’ as Trump to hold ceasefire talks with Putin

Paul Young and his wife Lorna had been on holiday in Santorini when the fall happened

Paul Young rushed into intensive care after horror fall on luxury Greek holiday

Owen Cooper

Adolescence star Owen Cooper, 15, reveals iconic role he wants to play and how his friends reacted Netflix drama

Israel launched a wave of strikes on Gaza last night - the largest attack since the January ceasefire

'Greatest fear realised': Families of Israeli hostages slam Netanyahu as Gaza strikes put captives 'at grave risk'

A group picture of all the researchers – from various science projects -- at the South African research station, SANAE IV, Antar

Revealed: Why Antarctic scientist 'snapped' on remote base as team begs for rescue after 'assaults and death threats'

Rescue teams at work after the plane crashed into the sea, on Roatan island, Honduras

Plane crash kills seven including popular music star after jet goes down off Honduras coast

The NHS watchdog has called for overweight patients to be weighed each year.

Overweight patients should be weighed every year so doctors can monitor them, says NHS watchdog

Pat McFadden

Pat McFadden defends changes to welfare system as he insists Cabinet 'united' behind plans - despite backlash

Driving test rules have changed

Warning over new rules for driving tests, as ministers push to slash waiting times

Gene Hackman and Betsy Arakawa Portrait

Fresh twist in death of Gene Hackman’s wife Betsy as it emerges she called doctors a day after police say she died

Exclusive
Civil servants are having their credit cards frozen

'We need to treat taxpayer money with respect': Ministers freeze civil service credit cards after spending quadruples

Exclusive
Part of the River Trent had 50 times the bacteria of safe swimming water

'There's something wrong with the water': Bacteria in UK river 50 times higher than safe swimming levels

The crash occurred on Friday night, near Shifnal, and involved a silver Audi A1

Third teenager dies after horror crash in West Midlands as one left fighting for life

King Charles III And Queen Camilla

King and Queen set to meet Pope next month despite pontiff's ill health

This image taken from NASA video shows the SpaceX capsule carrying NASA astronauts Suni Williams, Butch Wilmore and Nick Hague.

NASA astronauts 'stranded' in space for months begin journey back to Earth in SpaceX Dragon capsule

Israel has launched the largest strikes on Gaza since the ceasefire agreement with Hamas, killing and injuring dozens while promising 'increasing military force'.

Israel-Hamas ceasefire collapses as IDF launches 'extensive' strikes on Gaza killing 'at least 330'