The ICAEW has warned of a looming “fiscal time bomb” for British businesses and urged the government to do more to boost workplace skills and exports.The accountancy body said that the “fiscal time bomb” comprising the increase in the living wage, the apprenticeship levy and insurance premium tax hikes would impact on businesses. And, it added, once interest rates start to rise the economy could lose momentum from domestic spending. “Given that the chancellor reduced the pace of fiscal austerity at the Summer Budget, if growth slows beyond 2016, we could have a fiscal deficit after the next general election,” it said. Its warning came as it upgraded its economic forecast for 2015 from 2.3 per cent to 2.6 per cent, helped by a post-election bounce in business confidence and household spending, which was supported by rising earnings growth and low inflation. The ICAEW said it expected the UK to remain one of the fastest-growing developed economies this year and next and upped its business investment forecast for 2015 to 7.4 per cent from four per cent previously. This it said was due to a fall in spare capacity encouraging businesses to invest while interest rates remain low.
Read more from the ICAEW:
- SMEs say no to school leavers because of their poor work ethic
- Businesses raise investment fears
- Cash still king as cautious stance dominates SME decision making
Share this story