UK companies seek $10.3 billion as immediate pandemic support
Rishi Sunak leaves Downing Street in London. File/Reuters
With Britain back under lockdown and companies adjusting to life after Brexit, firms are taking big decisions about jobs and investment and need to know if their financial lifelines will be extended, the Confederation of British Industry (CBI) said.
“We just have to finish the job. Now would be a very odd time to end that support,” CBI Director-General Tony Danker said in a statement.
Sunak has extended his support measures several times already and has said his response to the pandemic will cost 280 billion pounds during the current financial year, saddling Britain with a peacetime record budget deficit.
But he is facing calls on many fronts to spend yet more including from lawmakers, some from his Conservative Party, who want an emergency welfare benefit increase to be prolonged.
The CBI said Sunak should extend until June his broad job retention scheme, which is scheduled to expire in April, and then follow it up with targeted support for jobs in sectors facing a slow recovery such as aviation.
He should give firms more time to pay back value-added tax which was deferred last year, grant a similar deferral for early 2021 and extend a business rates tax exemption for companies forced to close by the lockdown as well as their suppliers.
“The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop,” Danker said.
The CBI said its longer-term priority was an overhaul of the business rates system that it said was outdated and discouraging investment in low-carbon energy.
Danker said it was too soon to start raising Britain’s corporation tax rate, one of the lowest among rich economies after a Times report that Sunak was drawing up plans to increase it to start fixing the public finances.
“It would be wrong to raise business taxes when we don’t have a recovery,” Danker said.
Meanwhile, the British meat industry warned on Monday of looming border chaos as post-Brexit customs checks between Britain and the European Union (EU) halt some cross-border meat flows even with volumes sharply reduced.
In an attempt to ease into the new customs checks, British meat companies have cut trade volumes with the EU and Northern Ireland to about 20% for the first two weeks of January, the British Meat Processors Association (BMPA) said.
Even so, there have been “catastrophic delays”, said the group. It warned of worse to come as meat firms, together with a flood of other industries, are due to start ramping up exports from this week onwards.
“The current paper-based customs and certifications system is a relic. It was never designed to cope with an integrated, just-in-time supply chain,” said Nick Allen, head of the BMPA.
Under a deal reached last month, British trade with the EU remains free of tariffs and quotas on goods, but exporters, especially fresh produce sellers, say their businesses are still threatened by delays caused by customs checks.
The BMPA said meat exporters have had consignments returned undelivered and that European customers are already turning away from UK suppliers.
Moreover, some of Britain’s largest hauliers have ceased taking ‘grouped loads’ or consignments of mixed products, the BMPA said. About 40% of British meat trade with the EU is sent in this manner.
An increasing number of freight groups rejected contracts to move goods from France into Britain in the second week of January, while prices rose, according to data that shows the impact of Brexit and COVID-19 on UK trade.
Transporeon, a German software company that provides a network for suppliers, retailers, shippers and more than 100,000 logistics service providers, said prices were up 47% compared with the third quarter in 2020.
Prices had been up 39% in the first week of January. The third quarter of 2020 was chosen to reflect the most normal trade levels with regards to COVID-19 turbulence last year.
The data also shows that freight forwarders, the companies that book truckers or other modes of transport to move goods on behalf of suppliers, are rejecting jobs from companies they are contracted to serve, when it comes to moving goods to Britain. In the second week of January the rejection rate was up 168% on Q3, 2020, compared with the 102% jump it recorded in the first calendar week of the year. The data backs up what UK freight forwarders have been telling Reuters, that many European drivers are refusing to come to Britain after Brexit. And that prices are soaring.
