Commenting on the Conservative Party Manifesto, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said:

“A number of the headline commitments in the Conservative Party’s manifesto will be welcomed by business communities around the UK. If delivered, pledges to overhaul the broken business rates system, to deliver better digital and mobile connectivity, and to focus more systematically on unlocking the growth potential of cities, towns and counties around the UK would respond to some of the key concerns of the business communities we represent.

“However, the positive reception to some elements of the manifesto will be tempered by proposals that would increase up-front costs, regulatory obligations and uncertainty for businesses. The Conservatives’ proposed approach to immigration, at a time when many firms are already doing everything they can to train up and employ UK workers, will worry companies of every size, sector, region and nation. Some of the Conservative proposals for additional market intervention and new employment regulation will be questioned, even by firms that are not directly affected themselves, because of the signals they send.

“The Conservative manifesto recognises that the UK needs a strong economy, stable public finances, a strong domestic business environment and outward-looking trade policies to weather the Brexit transition and develop a new model for growth. However, the document includes few specifics on how these important goals will be achieved.

“Over the coming weeks, business communities will want to see much more detail on how the manifesto’s pro-enterprise elements would be implemented, and their concerns on its more interventionist elements clearly addressed.”

Commenting on the labour market statistics for April 2017, released today by the Office for National Statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

“With unemployment continuing to fall and employment levels rising, conditions in the UK labour market remain robust.

“However, labour market indicators often lag behind the wider economy and it remains likely that employment growth will start to soften over the near-term, as more subdued economic conditions and the rising cost of doing business in the UK stifle firms’ ability to recruit. The BCC’s Quarterly Economic Survey shows the proportion of firms reporting recruitment difficulties remains close to a record high, which is undermining their productivity and growth.

“With increases in regular pay slowing again, earnings growth is now comfortably trailing behind inflation. If the disparity between pay and price growth continues to increase as we predict, household spending is likely to slow further, weakening overall economic activity.
“The next government must do more to close the skills gap, including improving the transition from education to work by guaranteeing universal experience of work in all schools for under 16s, and delivering a future immigration regime based on economic need, rather than an arbitrary migration target. This will help firms compete on the global stage, boosting UK productivity and growth.”

Commenting on the Labour Party Manifesto, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said:

“High personal taxation, sweeping nationalisation and deep intervention in business decision-making are not the hallmarks of an ambitious and enterprising society. Taken together, some of the headline propositions in the Labour Party manifesto will give business communities across the UK real cause for concern.

“There are some bright spots in Labour’s manifesto, notably clear and specific commitments to reform Britain’s broken business rates system, which successive governments have failed to implement. The party is right to propose an immediate guarantee for EU nationals currently in the UK, which is a top priority for the many thousands of firms that employ them, as well as more flexibility for businesses to use the apprenticeship levy to train people here at home. Labour’s proposals to strengthen and ring-fence practical international trade support for SMEs deserve careful consideration.

“While Labour are making some specific and targeted propositions that could boost the growth prospects of small- and medium-sized firms, these will be largely eclipsed by their proposals for higher personal and business taxes in the eyes of business leaders around the UK.”

Commenting on the Bank of England inflation report and interest rate decision published on ‘Super Thursday’, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

“The Bank of England’s latest projections point to little change in outlook for the UK economy, compared to their February report, with only a slight downgrade for 2017. Significantly, the central bank see inflation as a greater risk to the UK’s growth prospects in the coming months.

“In our view the Bank of England’s forecasts are still too optimistic about the UK’s near-term growth prospects. We expect that inflation will weaken economic activity by more than the central bank is currently predicting, with wage growth likely to remain persistently below price growth over the next few years. Rising input costs faced by businesses are also likely to weigh more heavily on investment intentions than the Bank of England forecasts currently imply.

“The Bank of England is likely to face a major headache over the next few years as it seeks to strike a balance between managing a period of above target inflation and supporting more subdued economic growth. Longer-term uncertainty over the impact of Brexit on the UK economy is also likely to weigh on UK monetary policy decision-making. Against this backdrop, the most likely scenario is that the MPC will opt for a prolonged period of monetary stability and keep interest rates steady over the near term.

“Is vital that the next government addresses some of the longstanding issues facing the UK economy, including the relentless increases in the up-front cost of doing business in Britain, and investing in critical infrastructure to enable businesses to continue to drive investment, create jobs and boost growth.”