The Chartered Institute of Management Accountants (CIMA) has called on the government to use the upcoming budget to implement polices which will increase long-term economic growth by enhancing productivity. The submission covers improving skills provision, increasing investment, providing more certainty to UK businesses and addressing tax barriers to growth.
The UK economy has experienced slow to flatlining economic growth over the last few years. The OECD estimates that the UK economy is forecast to grow by only 0.7% in 2024. One of the big causes of the lack of growth has been the UK productivity slowdown over the last two decades.
Based on research amongst their membership, CIMA has drawn up a series of polices which, if implemented, would lift the UK out of its productivity slump and enhance economic growth. They include:
- The introduction of a productivity strategy and the creation of a productivity commission similar to the ones in New Zealand and Australia.
- Reform of the Apprenticeship Levy so employers can use the money on a wider range of training.
- Action to reduce fiscal drag. AICPA & CIMA research indicates that people being dragged into higher tax bands as a result of inflation has a limiting effect on productivity.
- More effective measurement of productivity in the public sector. AICPA & CIMA research indicates that the private sector is currently doing more to measure its productivity than the public sector.
- Allowing second-hand equipment to be claimed for under Full Capital Expensing, helping more businesses including SMEs to access the scheme.
- Creating an SME Investment ISA as a vehicle to encourage investment to grow UK SMEs.
These have been put to HM Treasury in a submission ahead of the budget on 6 March. The full submission is available here.
Commenting on this, AICPA & CIMA chief executive of management accounting, Andrew Harding, said: “We have been in a rut ever since the financial crisis of 2008, living through a period of stagnating living standards and low economic growth. Our poor rate of productivity improvement is the single biggest reason for this malaise, and it is well past time to fix it.
“Addressing this problem by implementing these policies would result in companies expanding and in turn living standards rising. Additionally, productivity improvement in the public sector would mean resources were being used more effectively, giving us better services. These are outcomes we all want and need to see, so it is time to grasp the nettle and execute a strategy that produces long-term sustainable economic growth.”
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