Businesses are calling for urgent government support to withstand the fall-out from sanctions on Russia and the Ukraine crisis as they warn of the risks of significant inflation and a dampening climate for investment.
The CBI, which represents 190,000 businesses employing seven million people, will today urge ministers to recognise a “looming crisis” in domestic and business energy bills and call on them to fast-track big policy issues around energy, supply chains and cybersecurity, and help companies to invest.
Tony Danker, director-general of the CBI, said it was clear that the UK and other western economies “now need to confront the economic consequences of unwinding from Russia”.
“This most obviously includes energy independence, significant cost inflation flowing from energy and other commodity costs, anticipated cybersecurity attacks, and dampening climate for investment.”
The lobby group said that businesses “fully support sanctions despite their cost”. BP, Shell, PwC and KPMG are among a raft of businesses that have said they will pull out of Russia.
British manufacturers including Jaguar Land Rover and Diageo, the Smirnoff vodka maker, have paused exports to Russia. The impact of sanctions on Russia has led to record energy prices, which risk causing a recession in Britain in the second half of the year. There are also fears for the impact of Russia’s invasion on food markets.
The CBI is urging ministers to speed up measures to make Britain resilient to economic threats and to support businesses at risk from rising costs. It wants to move faster towards clean energy solutions, with investments to grow wind power and nuclear, carbon capture and hydrogen, as well as recognising the role of domestic oil and gas.
Danker warned that the government will need to think “urgently” about consumers as bills go higher still later in the year, and said that we need to “move immediately towards energy efficiency in homes to dampen down demand”.
Energy intensive industries that are threatened by soaring prices will also need support, he said.
The Federation of Small Businesses said that help with energy bills for small businesses is going to be “critical”. It is calling for business rates discounts to offset higher energy costs. As the supply of commodities is threatened by sanctions, the CBI said that the government will need to identify new trading partners and a strategy to secure them.
Cybersecurity will need to be enhanced and embedded in society and business, Danker said.
To avert a slump in UK business investment, the CBI is urging the government to help create clean energy markets and new trading relationships.
Fresh investment tax deductions will also be a way to “signal that the UK can continue to benefit from tailwinds in the economy and not be put off course by Russia’s actions,” Danker said.
A government spokesman said: “Our new sanctions, including a commitment to phase out imports of Russian oil over the course of this year, send a clear message to Russia that nothing and no one is off the table. To ensure greater energy independence we are determined to generate more clean, cheap energy in the UK to reduce our exposure to volatile global gas markets, while backing North Sea oil and gas for security of supply.”