CONSUMERS drove a faster than first thought recovery in the second quarter of the year.
The Office for National Statistics yesterday upgraded GBP growth in the period from 4.8 per cent to 5.5 per cent.
Economists, business groups and campaigners called on the Chancellor to use the additional leeway granted by the upwards revision to pursue a growth-oriented budget at the end of the month – especially after new taxes imposed at the start of September.
Mike Cherry, national chair of the Federation of Small Businesses (FSB), said: “The Conservative Partys losing the trust of small firms which are bracing for a rise in the jobs tax at the same time as having to deal with haywire input cost rises across the board.”
“The budget must see the party step up to the plate, rediscover its entrepreneurial zeal, and offer more than tax grabs to fund growing public sector spend,” Cherry added.
UK businesses are being stung by soaring raw material, energy and shipping costs, which have been triggered by global supply chains buckling under the weight of demand roaring back as economies around the world emerge from Covid-19 restrictions.
Scarce supplies of everything from CO2 to turkeys are raising prices throughout supply chains. This heavier cost burden is being compounded by firms hiking pay to lure workers and higher national insurance bills down the line.
Concerns about swelling costs eating into margins have dampened business leaders’ confidence. The Institute of Directors found optimism about the UK economy plunged from 22 per cent to negative one per cent – in just two months.
The economy is still 3.3 per cent smaller than it was before the pandemic struck.
The spectre of a cost of living crisis, driven by higher energy bills, petrol shortages and a heavier tax burden, has dampened Brits’ confidence, which may prompt a pull back in spending.
Slashing taxes could put the recovery back on track, experts urged. Martin Beck, chief economic advisor to the EY Item Club, told City A.M. cutting taxes may help in “offsetting some of the headwinds facing the economy.”
“The government should focus on supporting growth, rather than finding even more ways to raise the burden of tax,” Julian Jessop, economics fellow at the Institute of Economic Affairs, told City A.M..