The CBI urged the government to freeze business rates for another year and to quickly implement targeted support to prevent otherwise viable businesses from collapsing.
Over the next three months, two-thirds of businesses will face a significant rise in their bills, with a third of those facing increases exceeding 30%.
The CBI also urged the government to offer businesses and the self-employed additional time to pay their tax bills and to provide easier access to loans.
"Firms aren't asking for a handout. But they do need autumn to be the moment that the government grips the energy cost crisis. Decisive action now will give firms headroom on cash flow and prevent a short-term crunch from becoming a longer-term crisis,” commented Matthew Fell, CBI chief policy director.
"With firms under pressure not to pass on rising costs, there is a risk that vital business investment is paused or halted entirely. That, in turn, could pose a real threat to the UK's economic recovery and Net Zero transition."
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According to the Confederation of British Industry (CBI), growth was up 21% in the period, compared with 32% last month. The CBI also noted that this was the slowest rate of growth since the three months to April. However, it remains significantly above the long-run average of 4%.
“Substantial challenges remain for businesses heading into Christmas: labour and materials shortages, rising costs and new Covid measures are restricting business’ ability to trade during this crucial period,” said CBI Lead Economist Alpesh Paleja.
“With uncertainty rising – associated with the sharp rise in Omicron cases – it’s no surprise that the near-term growth outlook has dampened. The new support measures announced by the Chancellor provided welcome breathing space to boost confidence and will help hospitality and leisure businesses to keep their doors open.”
“But with the potential of further measures still weighing on firms, the Government must monitor the situation closely,” Paleja added.
In the three months to December, only manufacturers saw an acceleration in growth. Meanwhile, business and professional services, consumer services, and distribution firms all reported slower growth.
It is expected that growth will slow again in the coming three months, accounting for the spread of the Omicron variant.
New data from the Office for National Statistics (ONS) shows that GDP rose just 0.1% in the month, below the 0.4% forecasted by economists, thanks to ongoing supply chain disruptions and staff shortages.
The figure remains below the pre-pandemic level of 0.5% seen in February 2020 and suggests that the UK economy was struggling even before the emergence of the Omicron variant in late November.
The ONS said that services output grew back to its pre-pandemic levels, growing 0.4% in October. Meanwhile, output in consumer-facing services was up by 0.3% on the month largely due to an 8.1% increase in the wholesale and retail trade. However, output at hotels and restaurants dropped by 5.5%.
“Growth disappointed in October, reinforcing concerns about the resilience of the UK’s economic recovery to the Omicron variant and the impact of further restrictions,” Alpesh Paleja, CBI lead economist, said.
“We need to create consistency in our approach and build confidence by reducing the oscillation between normal life and restrictions as we learn to live with the virus and its variants."
“Meanwhile, supply pressures remain acute and further rises in inflation are looming. We expect growth to build further momentum ahead, but more action is needed to address longer-term challenges, including “scarring” from COVID and poor productivity."
The latest service sector survey by the Confederation of British Industry (CBI) shows that sentiment for business and professional, and consumer services companies improved in the quarter. Nonetheless, this increase was at a reduced pace than the three months before.
In the three months to November, business volumes grew at a steady pace across the service sector, according to the CBI’s findings. However, there were some signs of slowing growth as companies expect volume growth to ease off in the next quarter.
During the three months, cost pressures also increased. Both consumer services and business professional services saw costs rise at their quickest pace since the surveys began in 1998.
Companies in each of the sectors now expect the pace to increase further still to 70% in the next quarter, marking the strongest expectations on record.
Profitability saw the strongest growth since February 2018, despite rocketing costs. With these rocketing costs expected to continue into the next quarter, it is predicted in both consumer services and business and professional services that profits growth will stall in the three months to February.
In November, the Distributive Trades Survey by The Confederation of British Industry (CBI) climbed to a three-month high of 39, up from 30 in October. The survey looks at whether retailers think annual sales growth is rising or falling. Separately, another measure of sales rocketed from -1 to 35, the highest it's been since September 2015.
Many shoppers in the UK have started their Christmas shopping early this year amid fears of shortages. In particular, clothing and department stores saw a substantial rise in sales volumes.
The CBI’s survey of 125 companies, including 51 retailers, revealed that online sales were lower than a year ago when the UK was in its second lockdown and non-essential shops were forced to close their doors.
However, the CBI expects internet sales to rise again as the festive season draws closer. This is despite the CBI also finding that UK shoppers currently face the largest price rises in over thirty years due to supply chain shortages and increasing raw material costs.
The Confederation of British Industry (CBI) is calling for delegates at this week’s World Economic Forum in Davos, Switzerland, to focus on global issues and work to kick-start the world economy.
Rain Newton-Smith, Director of Economics, CBI, speaking at the event, said: “As we dig out our snow boots and warm coats, and prepare to join the World Economic Forum's Annual Meeting in Davos, now is a time to focus our minds on global issues. We're a few years into the global recovery, but the benefits are not being felt by everyone. Youth unemployment is over 50% in Spain and Greece. And in many of the advanced economies, while employment growth has picked up, real wage growth is lagging behind. Households aren't feeling an improvement in their pockets,” she said.
According to the CBI, the UK is now enjoying a healthy recovery, with growth of around 2.5% expected this year; and employment in the UK now stands at 30.8 million, a record high. But at the same time, the average household has seen its income drop by 6% in real terms since the financial crisis.
“The key to addressing this is to improve productivity and skills, so companies can grow faster and pay their workers more. In the UK, while job growth has been strong, productivity growth has fallen 15% below its pre-crisis trend. There's an urgent need to raise productivity, which is a crucial part of addressing living standards and promoting sustainable growth. Improving productivity is not just a UK issue but a global one - with slower but more balanced growth, China will need to keep focusing on innovation as it moves to a more services-led economy with the urban consumer at its heart,” Ms Newton-Smith remarked.
CBI says that the focus on productivity needs to go hand in hand with improving skills. As the new wave of innovation hits, jobs are becoming more skilled. By 2022, half of all jobs in the UK will need workers who have some form of higher education. As such, businesses need to focus on helping their people build careers.
Innovation is higher in more open economies, according to 2013 research by the Centre for Economic Policy.
“Countries grow fastest when they trade with and learn from one another. There's no doubt that China's phenomenal growth has been driven, in part, by its ascension to the World Trade Organisation and its success in moving up the value added chain,” said Ms Newton-Smith.
“With several large trade deals on the global agenda, there is a real opportunity to boost growth for everyone. An ambitious Transatlantic Trade and Investment Partnership could boost the UK economy alone by £10 billion (€13 billion) every year. Reducing tariffs and boosting trade in services has tremendous potential. It's important that we seize the opportunity and get the global economy kick-started.”
The Confederation of British Industry (CBI) has called on world leaders to drive trade deals during the World Economic Forum, taking place in Davos, Switzerland this week.
“The UK economy is in good shape. Whilst the pace of growth is set to cool slightly, we can expect to see solid growth this year and next,” said John Cridland, CBI Director-General.
“However, businesses are facing a choppier global backdrop. Falling oil prices should be positive for the global economy, giving a welcome boost to household incomes and lowering costs for firms, but oil majors, exporters and producers are being hit hard. The struggling Eurozone, which is now in deflation, is likely to remain sluggish for some time and looming political challenges, with Greek elections on the horizon, could further dampen growth prospects.
“So it's all the more important that we seize opportunities for growth and investment. That means getting large international trade deals over the line - like the Transatlantic Trade and Investment Partnership (TTIP), and an agreement between India and its biggest investor, the EU.”
