UK: ICAEW calls for Government action on regulation and business support
THE UK economy is set to contract over 2012 as a whole and is likely to show only “very weak” growth next year, according a forecast by the Institute of Chartered Accountants in England and Wales (ICAEW).
The first ICAEW Economic Forecast, which builds on the established quarterly ICAEW/Grant Thornton Business Confidence Monitor, predicts that Gross Domestic Product (GDP) will fall by 0.5% this year, followed by growth of just 0.9% in 2013.
It says business investment will fall by 0.9% next year, suggesting the Office for Budget Responsibility’s current business investment growth forecast of 6.4% is unrealistic.
And employment is expected to show zero growth this year 2012 and to increase by only 0.4% in 2013 as private sector job creation struggles to offset public sector losses.
The unemployment rate is forecast to average 8.1% in 2012 and 8.4% in 2013, while total pay growth is expected to dip from 1.9% this year to 1.8% next.
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The ICAEW now plans to call on Chancellor George Osborne to include the creation of a new “Office of Regulatory Reform” (ORR) in his autumn statement, due in early December.
It says such a body should be handed responsibility for improving the UK’s regulatory environment and be able to comment on EU regulations or, or those made by independent regulators within the UK – something it says the current body, the Regulatory Policy Committee, is unable to do.
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The institute will also call for UK Trade & Investment to improver access to export information, to provide greater support for companies looking to grow beyond traditional markets, and for a new start-up division to be created within the Department for Business, Innovation & Skills to improve survival rates for new businesses.
Pippa Bourne, ICAEW regional director for the East, said: “In this low growth economic environment, we are seeing businesses adapting to a new normality.
“As businesses are not confident about the future, they are reluctant to invest, reluctant to increase pay and are more cautious in their future aspirations.
“There needs to be greater urgency about the Government’s growth agenda, a greater determination to implement reforms more quickly and a real emphasis on why the UK is now such a great place to do business.”