The region’s largest business group has called on the Government to hold an emergency budget as the rising cost-of-living crisis threatens hundreds of businesses.
The North East Chamber of Commerce has backed calls from the British Chambers of Commerce for a Budget that contains three key measures to limit price pressures and boost productivity.
It comes after increasing signs that many businesses are fearing a significant hit from rising inflation. This week an influential business survey suggested the North East economy was shrinking, with the North East being the only UK region to post a reduction in activity.
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The Chambers want the Government to reverse the recently introduced National Insurance increase for at least a year, cut VAT on energy bills from 20% to 5% for the same period, and address labour shortages by reinstating free Covid tests for companies.
John McCabe, chief executive of the North East England Chamber of Commerce, said: “The global economy is in the midst of a perfect storm right now and our own Government can’t fix all of these problems overnight. However it certainly can very quickly introduce measures that would go some way to ease the burden on people and businesses.
“An emergency budget is the right thing to do as it would provide the legislative platform that is needed to introduce the very straightforward support we’re calling for. If the Government doesn’t act now I’m extremely concerned a bad situation is only going to get worse, with the effect being felt most by those people, communities and businesses that can least afford it.”
A number of business groups have warned that the cost-of-living crisis is also turning into a cost-of-doing-business crisis due to rising energy bills, falling consumer spending, an increase in interest rates and disruption to global trade.
The Chambers say that postponing the recent National Insurance rise would return money to both companies and consumers, while a VAT cut on energy bills could see businesses saving hundreds of pounds.
They are also calling for the return of free Covid testing after research found many businesses being hit by staff absences and worried that employees are spreading the illness between themselves.
Shevaun Haviland, director general of the BCC, said: “These are simple, straightforward measures that can be quickly reversed when the economy is in better shape. The Treasury and HMRC have proven their ability during the pandemic to implement similar changes quickly and efficiently. Making these changes would have an immediate benefit for both businesses and the public.”
Labour has repeatedly called for an emergency Budget to address the current pressures facing households around the UK.
The calls come as the Bank of England last week raised interest rates to 1% and warned the economy will go into reverse with inflation peaking at more than 10%.
Today the NatWest North East Business Activity Index, which measures change in the region’s manufacturing and service sectors, has shown falling levels of business activity in April as companies faced increased costs, supply chain issues and falling orders. Employment levels among North East businesses also decreased for the first time in more than a year, with the North East the only UK region to report job cuts in April, the survey found.
