While many businesses are urging the Chancellor to avoid introducing sweeping changes at the Autumn Statement and instead prioritise stable policy, a significant number are also eager to see specific cuts to promote economic growth, according to EY’s Autumn Statement survey.
EY asked more than 1,300 finance professionals from UK companies to select the business-focused measures they would prefer the Chancellor to prioritise on 22nd November, as well as the steps they would like to see prioritised to promote UK economic growth.
Nearly two in five (38%) respondents said that avoiding significant changes where possible and instead focusing on consistent policy that enables companies to plan more effectively should be one of the Chancellor’s top two business priorities. However, when asked which steps the Chancellor should prioritise to promote UK economic growth, 58% of respondents said that they would favour some form of intervention, whether through cuts or incentives.
Among the respondents that favoured intervention to promote economic growth, more than a third (36%) said the Chancellor should prioritise tax reductions and incentives that encourage businesses to invest in the UK. This was closely followed by the 28% that said the Chancellor should prioritise targeted incentives and reductions to ease the cost of living on UK households.
Incentives to fast track the UK’s transition to a greener economy tied with a more general reduction in tax rates for all (each 14%).
When asked specifically about business-focused measures the Chancellor should prioritise, nearly two in five (38%) respondents said that avoiding significant changes where possible and instead focusing on consistent policy that enables companies to plan more effectively should be one of the Chancellor’s top two business priorities. Twenty per cent (20%) said this should be the Chancellor’s highest business-focused priority.
Meanwhile, 22% of respondents said that cutting the Corporation Tax rate to encourage growth should be the Chancellor’s top priority and nearly a third (32%) said it should be one of the Chancellor’s top two business priority areas.
In comparison, 19% said that making the currently temporary full expensing for investment into permanent business relief should be one of the Chancellor’s top two focus areas, and just 8% say this should be the highest priority. The Chancellor introduced full expensing as a three-year measure at the 2023 Spring Budget to mitigate the effect of the Corporation Tax rise on business investment in the UK.
Businesses are also eager to see the Chancellor take steps to fast track the UK’s transition to a greener economy. More than a third (37%) said that the introduction of tax incentives to specifically encourage investment into green industries and technology should be a priority area at the Autumn Statement, and 20% said it should be the highest priority.
Twenty-eight per cent (28%) of respondents said that cutting red tape should be a priority area and half as many (14%) said it should be the Chancellor’s highest business priority.
Chris Sanger, EY’s Head of Tax Policy, said “These results reflect the challenges facing the Chancellor as he approaches the Autumn Statement. Overall businesses are more likely to favour some form of intervention by the Chancellor and there is enthusiasm for specific incentives and cuts. However, at the same time UK businesses are also eager to see the Chancellor deliver policy stability and avoid sudden, unexpected changes. Ambiguity is one of the biggest enemies to a country’s global attractiveness and consistent, long term government policy will provide UK companies with the certainty to accurately plan over the coming years.”
“At the same time, businesses are keen to see whether the Autumn Statement will feature cuts that could partially counteract the UK’s tax rate, which is considered high. The enthusiasm for green incentives is interesting and may be due to an awareness of UK progress in this area compared to the US and the EU, which have introduced measures like the US Inflation Reduction Act to attract green capital. Incentives help stimulate investment in chosen areas and, with a Corporation Tax rate significantly higher than the incoming global minimum tax, the UK has plenty of room to enhance its competitiveness. However, we may need to wait until the Spring Budget for any significant announcements.”