Sunak set for speech with business leaders amid gloomy economic backdrop

Rishi Sunak will give a speech to business leaders on Monday, as the country braces for tough tax rises and spending cuts.

The speech to the CBI, expected to focus on innovation, comes only days after Chancellor Jeremy Hunt unveiled £25 billion of tax rises in a budget designed to restore market confidence in the UK after Liz Truss’s own disastrous mini-budget.

The plan for tough tax increases has caused concern among some Tory backbenchers, although the Prime Minister is not expected to face a full-scale rebellion over his budget plans.

Away from Westminster, Mr Sunak is expected to receive a tough message from businesses during the conference in Birmingham, with CBI director general Tony Danker expected to urge the new administration to end arguments over Brexit and to use immigration to solve worker shortages as a way of boosting growth.

G20 summit
Mr Sunak is expected to receive a tough message from businesses during the conference in Birmingham (Leon Neal/PA)

Downing Street was forced to categorically deny a report in the Sunday Times over the weekend that the Government could pursue a Swiss-style relationship with the EU, in a bid to see off a potential clash with Brexit-backing MPs.

A Government spokesperson said: “This Government is focused on using our Brexit freedoms to create opportunities that drive growth and strengthen our economy.”

But the CBI boss is expected to flag concerns over the as-yet unresolved row with the EU about the Northern Ireland Protocol as one of the major drags on growth.

“Boris Johnson achieved a deal with the EU that allows us to continue to trade tariff and quota free with our biggest trading partner. There’s some good stuff in there. Currently locked up,” Mr Danker will say in his opening speech.

“But, still, we argue over the Northern Ireland Protocol. Still, we argue over sovereignty. Get round the table, do the deal, unlock the Trade and Co-operation Agreement. I say to Brexiteers, the best guarantor of Brexit is an economy that grows.

“Its biggest risk is one that doesn’t.

“Now I know that some of these things will not be popular with politicians. But while I have no problem with Government taking tough choices to bring stability, I want them to also take tough choices for growth.”

With the UK forecast to already be in recession, Mr Danker will also tell the conference: “The painful reality about growth is that it can’t be stimulated overnight. That’s what the mini-budget got wrong.

“Across-the-board tax cuts. Immediate demand stimulus. Relying on the old British strength − consumption − at the expense of the perennial British weakness − investment − has given growth a bad name.”

Praising Mr Hunt for “staying the course” on projects designed to generate growth, such as HS2 rail and the new nuclear power plant at Sizewell C, the CBI boss will also offer the Government various solutions to boost the flagging economy.

Pointing to ongoing “barriers” to growth, Mr Danker will call on politicians to be “practical” about immigration.

“Let’s have economic migration in areas where we aren’t going to get the people and skills at home any time soon. In return, let’s make those visas fixed term.”

It comes as Labour accused the Conservatives of having broken their own fiscal rules 11 times since 2010.

“The Conservatives’ fiscal rules aren’t worth the paper they are written on,” said Labour’s shadow chief secretary to the Treasury Pat McFadden.

“Not only have the Tories spent 12 years badly weakening our economy, they crashed it in the middle of a cost of living crisis and left working people paying the price.”

A Treasury spokesperson did not dispute Labour’s claim, but said: “Like the rest of the world, the UK has been impacted by serious economic shocks in the past few years, from the Covid-19 pandemic to Putin’s invasion of Ukraine.

“These are not challenges unique to the UK.

“Despite these global challenges, we are determined to get the public finances back on track, and the Autumn Statement set out a clear plan to tackle inflation and get debt falling, while supporting growth and public services.”