Budget must give businesses breathing space to deliver growth

The Chancellor must use next month’s Budget to give businesses the breathing space they need to deliver growth – including by freezing the business rates multiplier for one year – according to the chartered accountancy body ICAEW.

Research from ICAEW, which was used to form its Budget submission to HM Treasury, pointed to a clear mandate from its UK members, who urged the government to ease immediate cost pressures and provide a stable, predictable framework for growth and investment.

Reducing cost pressures (59%) was the biggest priority for the 1,154 members polled, closely followed by simplifying the tax and regulatory system (56%) and kickstarting economic growth (56%).

To ease pressure on business, ICAEW has urged the Chancellor to set out a plan in the Budget to radically reform or replace business rates. But to support businesses in the short term, the Institute has called for an immediate one-year freeze in the business rates multiplier for one year in 2027/28.

Meanwhile, in a letter to Chancellor John Healey, ICAEW Chief Executive Alan Vallance appealed for politicians to provide greater certainty to business, acknowledging much was outside government control.

To restore business confidence and boost investment, ICAEW has also recommended the following practical measures:

• Rule out further increases in employment taxes during this parliament to give businesses greater certainty to invest and hire
• Clarify the definition of “current budget balance” in the fiscal stability rule ahead of the Budget to help avoid market surprises
• Fix tax administration by prioritising investment within HMRC to improve performance
• Expand the Growth Guarantee Scheme to help SMEs invest.

These reforms, ICAEW said, would help to restore business confidence, unlock investment, strengthen the public finances and support growth across every part of the UK.

Alan Vallance, ICAEW Chief Executive, said “As his maiden Budget approaches, the Chancellor faces significant challenges. His ambition to deliver growth and raise living standards across the country should be lauded, but will only be realised if businesses are given the breathing space to invest, hire and grow.

“The Budget presents an important opportunity to turn ambition into practical action. Businesses have been burdened by rising costs, higher taxes, regulatory change and persistent uncertainty for far too long. Our members have told us consistently that uncertainty is the biggest obstacle to investment.

“In our view, reforming business rates is fundamental to eliminating barriers that prevent growth and investment. While we appreciate wholesale changes will take time, a one-year freeze in the business rates multiplier would reduce the burden on businesses immediately. Meanwhile, a clear commitment for reform in the long-term will give businesses hope that the constraint business rates place upon them can finally be alleviated.

“While there is much the government can’t control, with geopolitical events taking a hammer to business confidence in recent years, it can reduce the barriers to growth, provide greater certainty and make it easier for businesses to invest.”