The Confederation of British Industry (CBI) unveiled its 10-point plan on Monday to keep business working, safeguard jobs and position the economy for recovery.
Ahead of the Pre-Budget Report which is planned to be out later on Monday, British leading business organization is calling on the government to take immediate action to help struggling businesses to improve their cash flow, or risk healthy firms going under and unnecessarily prolonging the recession.
The CBI's 10-point plan includes the improving the flow of capital to business, protecting trade credit insurance, preventing questions about "going concern" status from reinforcing the downturn, modest business tax cuts to ease cash flow problems, and Measures to support small and medium-sized firms.
With credit markets still paralyzed, and consumer and business confidence at a low following the banking crisis, the CBI has identified actions the government should take now to give business and the economy an immediate boost.
In a letter to the Prime Minister Gordon Brown, the CBI calls for measures to ease cash flow to business and a fiscal boost in the Pre-Budget Report, aimed at helping firms retain their staff through the downturn.
Richard Lambert, CBI Director-General, said "We need to keep business working to safeguard jobs and we need to act now."
Lambert said that the biggest threat hanging over businesses is cash flow. "If they cannot get their hands on the cash and credit they need to go about their day-to-day business, there is a real risk we could see healthy firms going under."
"The next six months will be critical", the CBI chief said, adding that if Britain is to stand a fighting chance of preventing this recession from becoming longer and more painful, the government needs to act now to get the credit markets working properly.
The most effective way of supporting economic activity and keeping people in jobs would be a temporary reduction in employer National Insurance contributions, he said.
"But given the poor state of public finances, any fiscal stimulus package will need to go hand-in-hand with a credible framework for getting back on track, which would prevent future generations being burdened with huge levels of debt.
The CBI chief said that there are also some other relatively quick and painless things the government can do that will provide an immediate boost to business, such as scrapping empty property rates relief, a temporary freeze on business rates and bringing forward some elements of planned capital spending.
The CBI urged the government to do all they can to help "unblock" the financial markets and improve the flow of funds to businesses to prevent otherwise healthy firms going into administration.
It said that the Bank of England should consider whether it should create a scheme to improve liquidity in the commercial paper market similar to the US model.
Modest business tax cuts to ease cash flow problems should include the scrapping of empty property relief rates, and with firms demolishing property as they cannot afford to pay the rate, the Government should act swiftly to restore the regime to its pre-April 2008 position, and in the meantime implement an immediate 50 percent reduction as allowed for within current legislation.
A temporary freeze on business rates is also taken as another action to stimulate economy.
(Xinhua News Agency November 24, 2008)
