Rachel Reeves urged to give businesses 'serious confidence boost' at Spending Review by CBI

The spending review, due to be announced by the Chancellor on June 11, will set three-year Government department budgets.

Next Wednesday, Mr Reeves will deliver a Spring Statement against the background of a faltering economy and drastically reduced headroom against the debt rules she set herself in October.

The CBI is arguing for the Spending Review to include measures such as the UK becoming the leading G7 nation for research and development spending; setting a clear timeline for carbon capture and storage projects to enable investment decisions and fully funding apprenticeship schemes for SMEs.

It is also calling for the extension of the Industrial Energy Transformation Fund, the expansion of Made Smarter to support wider tech adoption, and backing for the British Business Bank to expand its Growth Guarantee Scheme.

The joint letter to Ms Reeves from CBI CEO Rain Newton-Smith and chief economist Louise Hellem states: “Whilst we recognise the tight fiscal environment, the Spending Review provides a catalyst to consider long overdue decisions where public services can be delivered in a better way, improving digitalisation and building partnerships to drive growth across our four nations.”

It added there should be a focus on using technology to drive efficiencies and reduce costs on businesses.

The letter said: “Previous governments, in times of fiscal constraint, made cuts to already stretched departments delivering similarly stretched public services to detrimental effect. This government should choose a different path, taking advantage of developments in technology to drive efficiencies, streamlining processes alongside reducing burdensome regulations.

"Members have welcomed positive early progress in these areas, such as the AI Opportunities Action Plan, but continue to see outdated and under-resourced systems hindering critical improvements to UK productivity.”

Ms Hellem said today: “The UK stands at a pivotal moment. To unlock sustainable growth we must move beyond discussions to accelerate investment through targeted innovation as well as policy and regulatory reforms.

“Decisions made at the Autumn Budget and upcoming changes outlined in the Employment Rights Bill have knocked business confidence. Our economic analysis shows that firms are set to reduce output and hiring and are having to pass on cost increases to customers. The broader economic outlook remains subdued with the OBR expecting downgrades in 2025.

“With the right actions, the Spending Review can serve as a catalytic moment for hardwiring the Growth Mission into the heart of Whitehall. But for that Growth Mission to succeed government must inject business with a serious confidence boost.

"As an immediate priority the government should re-commit to not raising the business tax burden further over the course of this Parliament. Setting an ambitious goal for R&D spending, making it easier to invest in skills and taking measures to reduce the regulatory burden on business would be encouraging moves that would show the government understood what business needs to see from them.”