The new president of Britain’s largest employers group has warned the UK faces a deeper and longer economic downturn than many expect, with living standards likely to be set back by at least two years.

Businesses were struggling to cushion consumers from rising inflation, he added, calling on the government for a co-ordinated response to the cost of living crisis, which he said could hit the economy as badly as the pandemic.

In his first interview since being appointed president of the CBI this week, Brian McBride said his varied career has equipped him with the experience needed to handle the various challenges facing the UK economy.

McBride has taken over from Cobra Beer boss Karan Bilimoria at the CBI. He started his career selling photocopiers for Xerox in Glasgow, before joining technology company IBM, and was hired by both Dell Technology’s Michael Dell and Amazon’s Jeff Bezos to run their respective UK operations.

McBride also launched 3G at T-Mobile UK, and currently serves as chair of Trainline, the digital train ticketing company, alongside board positions at companies such as asset manager Abrdn.

The incoming president also urged ministers not to tear up parts of the Northern Ireland protocol. He argued that the UK needed to negotiate with the EU over the Brexit trade treaty instead given businesses in the region saw the current arrangement as workable. He added this was “a time for economics, not politics”.

McBride raised concerns over the impact of strike threats this summer on business.

“I never say that people shouldn’t be allowed to strike [but] the disruption is going to cost business,” he said.

Inflation reached a 40-year high in April owing to supply chain pressures, rising commodity prices sparked by the war in Ukraine and the global energy crisis. Last month, the OECD has cut its UK growth forecast for 2023 to zero, the lowest in the G20.

Business confidence has fallen sharply, with industrial action once again becoming a consideration for employers as living costs spiral. Companies were already lowering investment, according to McBride, given fast-rising inflation and concerns over future demand.

“Companies are taking action; they are cutting back what cost they can. It’s very hard when things are tough just to say — I’m going to spend this money today, and I’m not going to get the benefit from it for three years.”

McBride called on the government to accelerate plans to replace the “super deduction” tax break on investment, which the chancellor had promised to look at in the autumn budget.

“We need to encourage investment today, because that investment that we make today isn’t even going to pay off in the next 12-18 months.” He warned that the peak of the downturn is “probably going to be higher, and it’s going to take longer to get out of this thing”.

Businesses have been a buffer to consumer inflation so far, McBride added, given a reluctance to pass on all the costs that they faced. But, he added, companies were often not able to match inflation in the wage increases they were able to offer.

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The CBI president said that he “understands what living on the margin is like” as he was one of eight children raised on a Glasgow council estate by his father, a teacher, and his mother, who was a nurse.

“People’s costs [and] living standards are absolutely going to go backwards over the next year or two, without a doubt. People will have a tougher standard of living for the next two years. For individuals and for businesses, we are in for a tough time,” he said.

McBride called for a more cohesive response from ministers to help businesses deal with the cost of living crisis, arguing that the “government has to take responsibility in terms of co-ordinating the response to this, and we’re not really getting that yet”.

Even so, he said the relationship between the business group and government had improved since fractious exchanges over the CBI’s opposition to leaving the EU.

McBride said the debate over Brexit was in the past. “The last thing this country needs is another two or three years of debate and argument and a terrible civil political war. I think the government has moved on, and I think business has moved on.”

McBride, who serves as the lead non-executive director for the Department of Defence, said that he can use his connections across the civil service to further strengthen the relationship between the government and business.

He cited ambitions to attract a new generation of tech-focused companies to the employers group. “The CBI has tried, but probably hasn’t resonated as much with companies in the digital economy. I think having me there helps build a bridge.”

He pushed for Amazon to become a member and dismissed criticism over whether the UK’s leading business organisation should lobby on behalf of overseas businesses — some of whose tax arrangements have been questioned in the UK.

“If you’ve got a presence in the UK, or you’re employing people here, I don’t think there’s any problem with them being members. If we were only to represent British based companies, we’d cut out an awful lot of the economic activity.”

Scottish referendum would be a ‘huge distraction’

Brian McBride warned that an independence vote for Scotland would be a “huge distraction” given the economic crisis facing the devolved regions of the UK.

McBride grew up in Glasgow and went to university in the city. He still spends much of his time in Edinburgh and Glasgow, where he often watches Celtic play.

He said that the region had other things to worry about beyond the independence debate at this time.

“That’s not to say it’s not important . . . but it absolutely will distract people. All the focus today from government and business should be on getting the economy moving again.”

The Scottish government had said that getting “the economy started and sorted was job number one”, he said.

“Well, it isn’t fixed yet. The UK economy, and the economy in the regions, is facing a big, big crisis. And that should be the focus of politicians today and not what I would call political issues.”

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