Tax u-turn was the 'right thing,' CBI chief says following Chancellor's announcement
3 October 2022, 10:37 | Updated: 3 October 2022, 10:42
The Director General of the CBI has told LBC that the chancellor's u-turn over scrapping the 45p top rate of income tax was 'the right thing" to do.
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Speaking to LBC's Nick Ferrari this morning, Tony Danker, the Director General of the CBI, said: "I think Kwasi, the chancellor has done the right thing this morning. The reason I say that is because, you know, this was a budget of two halves. You had some very good economic reforms here, which - he's absolutely right - will be good for growth, which businesses have been wanting to see for some time.
"But the other stuff was getting in the way, it undermined market confidence - clearly in the last 24 hours it undermined political confidence - and I hope what this begins to do is exactly to your point, it brings stability.
"Because stability is the precondition to investment. None of this growth plan will work unless we have stability - let's hope this is the beginning of it."
When asked whether the 45p rate proposal was 'nuts', Mr Danker said that there might be an argument for it in a 'different era':
"It's clearly a political position, in my view, I said that I didn't think it would be in the top 30 things that would get the growth going.
"Now there may be a good argument for it, that's for another day I guess, or perhaps a different era.
"But I certainly don't think if you were to tell me 'what are the big things that are going to get the economy going', I don't think that would have been one of them.
Mr Danker also said that the crash in the value of pound sterling following the mini-budget had been "really hard" for businesses, and brought higher interest rates "sooner than we might have hoped":
"It's been really hard, because I think there are a lot of businesses who frankly are relying on exchange rate. So you've got some exporters who may have benefited, you've got some importers who really would've struggled.
"And the higher interest rates that have resulted - that always would have resulted, let's be honest - but have probably been higher and sooner than we might have hoped, that will affect borrowing to invest.
Mr Danker did however say that there was optimism among UK businesses when it came to future growth opportunities:
"There is a lot optimism amongst businesses about growth opportunities, but what they can't live with is instability in markets, instability in monetary policy.
"So the sooner that stabilises, I hope we'll get that growth going."
Mr Danker was then asked if he listened to Nick's earlier interview with the Kwasi Kwarteng, in which the chancellor did not specify when the economic growth that his mini-budget was aimed at generating would occur.
Mr Danker said he had heard the chancellor's interview, and said of the chancellors response:
"The one thing I thought he was going to say, which surely is true, which is that's exactly what he and the OBR are going to be discussing in the next few weeks.
"When is growth going to come and at what rate? That's exactly what the OBR will do.
Read more: Kwarteng fails to rule out further U-turns after humiliating 45p tax cut reversal
Mr Danker also praised the two and a half percent growth target as the right "north star" for the economy, and hailed the "radical economic reform" that had resulted:
"I think by targeting two and a half percent growth, by making that the north star, all of a sudden we've opened up much more radical economic reform than we've had for quite a long time.
"So I absolutely welcome the prime minister and the chancellor saying 'this country should be growing at two and half percent - they're right.
"Now would I forecast it for next year? I think that would be a little optimistic, but I think it's the right north star for the economy?"
Read more: Pound bounces back overnight after a U-turn on Government plan to abolish the top rate of income tax
When asked about the current health of British business, Mr Danker said that the outlook varied by "sector", but said that with "stability" and "reforms" that growth would "start to pick up":
"It [the health of British business] depends on the sector you're in, is the honest truth. If you're face-to-face with a consumer who is struggling with the cost of living crisis and energy bills, you're finding it very tough.
"If you're working in some of the growth sectors of the economy like life sciences, or clean energy or digital growth, there's real opportunity.
"So it's a really mixed picture, and I think if we get stability, I think if we can have interest rates that are manageable... I think if we can get those growth reforms, I think you will see growth start to pick up."
