UK companies tell Rishi Sunak: Time is running out to save UK plc from the perfect storm | Economic growth (GDP)

Rishi Sunak has warned the government is running out of time to bail out the economy amid rapidly deteriorating growth prospects and rising inflation hitting businesses.

British Chambers of Commerce (BCC) director-general Shevaun Haviland said the chancellor urgently needed to announce a financial aid package for companies struggling with a “perfect storm” of rising energy prices, chronic staff shortages and supply chain problems.

“They need to support businesses now,” she told the business group’s annual conference in London. “We have limited time. The government has until the fall budget to reset, reconsider and get their house in order.”

Britain’s economy is coming under heavy pressure, with inflation at its highest since 1982 and Bank of England governor Andrew Bailey warning that the UK was facing a bigger slowdown than many of its global rivals. Inflation was already 9.1% in May and is expected to exceed 11% this autumn.

Economists at Goldman Sachs said on Wednesday that the odds of a recession in the UK had increased, moving closer to 50-50. Analysts at the US investment bank said: “We think a recession in the UK is more likely than in the euro area (40%) and US (30%) and that recession risks are more apparent in the UK, with the current quarter likely in shrinkage area.”

Sunak said in an interview with Haviland at the BCC’s annual conference that the government would announce a new round of investment incentives to support companies in the fall budget. “We know how important business investment will be to our recovery, so we want to make sure the fall budget will continue to support that,” he said.

The chancellor said the government was working on plans to replace its “super deduction” scheme, which will help companies ease their tax bills when they invest in productivity-enhancing technology and assets. “It was temporary and will expire next spring. But what we are committed to is finding a more permanent replacement for the super deduction, which will continue to strongly boost business investment.”

Official figures show that in the first three months of the year, UK households again faced a decline in real income amid severe pressure from rising energy costs.

Real household disposable income fell 0.2% in the first quarter, according to the latest GDP data from the Office for National Statistics – the fourth consecutive quarterly decline, in the worst run since records began in 1955.

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Boris Johnson, speaking before the NATO summit during a visit to Madrid, suggested he wanted to cut food tariffs “we don’t need” to address the cost of living by lowering the price of imported goods. He said the government would review its options.

Anne-Marie Trevelyan, the international trade secretary, is working on a list of products on which tariffs can be reduced, the Times reported. However, she used a speech at the BCC conference to warn that “arbitrary” cuts would have a negative effect and bring little benefit to UK consumers.

“Tariffs are not the only and end of trade policy, and haphazard cuts are not a lasting solution to economic problems,” she said.

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