Over the past few weeks we've been trying to highlight what we think today's Autumn Statement from the Chancellor needs to deliver.
If the forecast revisions from the OBR are as bad as most of the media seem to be expecting, then our central claim, that the government's Fiscal Mandate is most threatened by weak growth will be vindicated.
The government must act now to support growth.
This doesn't mean throwing away its hard-earned fiscal credibility; quite the opposite – the two are intrinsically linked. That is why we have thought carefully about the options we have advocated on behalf of our members. We are not calling for unrestrained fiscal loosening.
Our central policy recommendation to address weak short-term prospects for growth is to bring in a temporary policy of 100% capital allowances for two years for new investments.
• The government needs investment to drive overall growth;• Nose-diving prospects in Europe are causing companies' to think twice about investment;• The financial sector is becoming more nervous about supporting investment meaning cashflow is even more important to drive investment;• Our medium-term competitiveness depends on firms investing now to stay ahead of the competition.
Critically this is a policy that is totally compatible with fiscal credibility. Capital allowances are already a legitimate expense representing depreciation that can be claimed by investing businesses, albeit over a longer timescale. For a given level of investment, within five years 63% of the cost to Treasury would be incurred anyway under existing parameters.
This policy would bring forward planned investments now and encourage more investment. But a ‘plan for growth' doesn't end here.
The Chancellor must start painting in the picture of his ambitions for growth by setting out how the UK can become the best place to do business in the G20.
What does our business environment need to look like in five years time to meet this ambition?
For our members it's about focusing on four key areas, which we've been highlighting.
Reducing the tax burden: e.g. by compensating our energy intensive industries for the impact of carbon taxes; and making the R&D tax credit payable above-the-line
Improving access to finance: e.g. bringing down the cost of finance by boosting competition in the banking sector and increasing sources of debt and equity finance outside of banks
Decreasing the regulatory burden on businesses: e.g. by sweeping away stifling regulations holding back employment
Increasing the supply of skilled workers: e.g. by formalising the status of apprenticeships and improving and increasing maths and science education at secondary level.
We've seen some positive movements already from the Treasury on these areas including the package for energy intensive industries, Vince Cable's employment regulation announcements last week, and the so far detail light credit easing plan.
In two hours time we'll see how far the ChX's commitment to growth runs.