The government is being urged to announce an extension to both the furlough scheme and the business rates holiday before the Budget in March.
The calls come from the Confederation of British Industry (CBI), which said in its Budget submission to chancellor Rishi Sunak businesses cannot afford to wait nearly two months to know if they will receive further help.
The end of April is the cut-off for the furlough scheme while a rates holiday finishes at the end of March, but many firms are planning for the rest of the year and need some clarity and assistance.
Tony Danker, CBI director-general, said: ‘Our Covid-related business support asks are about moving now or soon, rather than waiting until March 3… Business support needs to go in parallel with the tiering of restrictions.
‘Sudden stops and cliff edges really don’t help and I don’t think anybody in government believes that we’re going to have a sudden opening up with the economy.’
The CBI went on to say that business rates will become a serious problem if not addressed ahead of the Budget, with a rates holiday for retailers, leisure and hospitality sectors due to end at the end of March.
The holiday should be extended by at least three months, said the organisation, and the government
should commit to a significant overhaul of the commercial property tax, which remains the highest in the G7.
We know that businesses are taking decisions now and we really need to target that support at the sectors that are particularly challenged
Other measures being urged by the CBI also include ensuring the Budget is focused on job creation and creating a net zero economy to drive growth, including a review of fuel duty.
Tax credits for research and development should be introduced with particular focus on digital technologies, it said.
But first, the government must announce how businesses can continue to be supported through the Covid-19 pandemic prior to the March 3 Budget, the CBI added.
Rain Newton-Smith, CBI chief economist, said: ‘What we are saying to the chancellor is you need to act now on some of that business support just to help to really build that bridge to the other side of this crisis.
‘We know that businesses are taking decisions now and we really need to target that support at the sectors that are particularly challenged, where that resilience is particularly low.
‘Furthermore we really need the chancellor to act on some of the longer term things that will really get business investment going and put this recovery on a much more sustainable footing both now and into the long term.’
Some economists have suggested taxes will need to go up for covering the cost of the pandemic, but Newton-Smith said it would not be sensible for an increase to take place now.
She said: ‘We don’t see now as the time to be increasing taxes… you need to wait until one or two years after you’ve seen the trough in GDP when growth is back on a sustainable trajectory before really trying to think about either significant cuts in government spending or significant increases in taxation.’
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