The Government should announce an extension to the furlough scheme and business rates holiday before the Budget in March, according to the Confederation of British Industry (CBI).
In its Budget submission to Chancellor Rishi Sunak, the CBI said businesses cannot be expected to wait nearly two months to know whether support will be extended beyond the current deadlines.
The furlough scheme is currently set to finish at the end of April and a rates holiday closes at the end of March but many businesses will already be planning spending for the year ahead.
Tony Danker, CBI director-general, said: “Our Covid-related business support asks are about moving now or soon, rather than waiting until March 3… Business support needs to go in parallel with the tiering of restrictions.
The organisation said business rates will become a particularly serious problem if not addressed ahead of the Budget, with a rates holiday for retailers, leisure and hospitality sectors due to end at the end of March.
This should be extended by at least three months and the Government should commit to a significant overhaul of the commercial property tax, which remains the highest in the G7, the CBI said.
Other measures being urged by the CBI also include ensuring the Budget is focused on job creation and creating a net zero economy to drive growth, including a review of fuel duty.
Tax credits for research and development should be introduced with particular focus on digital technologies, it said.
But first, the Government must announce how businesses can continue to be supported through the Covid-19 pandemic prior to the March 3 Budget, the CBI added.
Rain Newton-Smith, CBI chief economist, said: “What we are saying to the Chancellor is you need to act now on some of that business support just to help to really build that bridge to the other side of this crisis.
“Furthermore we really need the Chancellor to act on some of the longer term things that will really get business investment going and put this recovery on a much more sustainable footing both now and into the long term.”
Some economists have suggested taxes will need to go up for covering the cost of the pandemic, but Ms Newton-Smith said it would not be sensible for an increase to take place now.
She said: “We don’t see now as the time to be increasing taxes… you need to wait until one or two years after you’ve seen the trough in GDP when growth is back on a sustainable trajectory before really trying to think about either significant cuts in Government spending or significant increases in taxation.”