CIMA called on the UK government to use the upcoming budget to implement policies that will increase long-term economic growth by enhancing productivity.
“The UK economy has experienced slow to flatlining economic growth over the last few years,” a CIMA news release said, referencing estimates from the Organisation for Economic Co-operation and Development that forecast a growth rate of 0.7% this year.
A report released last year by AICPA & CIMA, together as the Association of International Certified Professional Accountants, found a link between taxation, productivity, and wider economic growth in contrast with other developed countries.
Andrew Harding, FCMA, CGMA, chief executive–Management Accounting at AICPA & CIMA, said the UK has been in a rut ever since the 2008 financial crisis, living through a period of stagnating living standards and low economic growth.
A leading cause of slow growth has been the UK productivity slowdown over the last two decades, the release said. Based on member research, CIMA suggested a series of policies to enhance economic growth.
According to the release, they include:
- The introduction of a productivity strategy and the creation of a productivity commission similar to ones in New Zealand and Australia.
- Reform of the Apprenticeship Levy so that employers can use the money on a wider range of training.
- Action to reduce fiscal drag. Previous 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 small- and medium-size entities (SMEs), to access the scheme.
- Creating an SME Investment ISA as a vehicle to encourage investment to grow UK SMEs.
“Addressing this problem by implementing these policies would result in companies expanding and in turn living standards rising,” Harding said in the release. “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.”
CIMA’s submission has been put forward to HM Treasury ahead of the UK government’s Spring Budget expected on 6 March.
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.
