LONDON, June 4 (Reuters) – The Confederation of British Industry called on Britain’s government not to treat business as a cash cow or accuse companies of price-gouging as the country expects to struggle with a cost-of-living shock triggered by the Iran war.
The employer organisation said 31% of British tax revenues last year came from business, the highest proportion since comparable records began in 1998.
“Business is not a cash tap that can be turned on without consequence … You cannot tax your way to growth, and we must not try,” CBI Chief Executive Rain Newton-Smith said in remarks ahead of the body’s annual dinner in London.
Britain’s Labour government sought business support ahead of its sweeping July 2024 election victory, but the relationship soured after finance minister Rachel Reeves sharply increased employers’ social security contributions in her first budget.
The CBI said that cost £27 billion ($36 billion) last year, equivalent to the cost of employing 1.3 million young people on the minimum wage at a time when the government is worried about rising youth unemployment.
More recently, Reeves said she was ready to give regulators extra powers to tackle price-gouging, following concerns that heating oil companies unfairly jacked up prices at the start of the Iran war.
The CBI said it was wrong to suggest to the public that businesses were taking advantage of the situation.
“The narrative of profiteering and price-gouging is not just wide of the mark, it’s deeply damaging,” Newton-Smith said, adding that many firms were “paddling furiously” to stay afloat.
With Prime Minister Keir Starmer’s grip on the Labour Party looking weak, the CBI also expressed dismay at the prospect of a leadership challenge.
“Business cannot afford a summer of stagnation while the politics play out. There is a real, material cost to what’s happening in Westminster now,” Newton-Smith said.
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