Recent Release | 10 Mar 2023
The case for a permanent investment deduction
Scenarios & Macroeconomic Modelling
Oxford Economics
This report is CBI‘s business case for a successor to the super-deduction regime. It investigates policy options the UK can deploy to maintain its global tax competitiveness and avoid a drop in business investment.
Background to the research:
- Investment incentives are set to fall in the UK. In April 2023, the Corporation Tax rate is set to increase from 19% to 25% at the same time as the end of the super-deduction regime.
- Before the super-deduction was introduced the UK ranked 30th out of 37 countries in the OECD for capital allowances and it could return there once the super-deduction ends.
CBI analysis, conducted in collaboration with Oxford Economics, shows that a permanent investment deduction (100% full expensing) could unlock:
- A 21% (£52.8bn) increase in the level of business investment per year by 2030/31.
- An increase in the level of GDP by 2.0% (£53.1bn) by 2030/31.
- While there is an upfront cost, the long-run net balance sheet impact is positive for Government.
The experts behind the research
Felicity and Daniel, members of the Scenarios and Macro Modelling team, are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques.
Felicity Hannon
Associate Director, Climate Scenarios & Macroeconomic Modelling
Daniel Moseley
Lead Economist, Scenarios and Macro Modelling
You might be interested in
The growing importance of energy efficiency in home buying decisions
Our proprietary analysis shows that that homes with a higher Energy Performance Certificate (EPC) rating sell at a premium.
Find Out More
Infographic: Measuring risk exposure to China-Taiwan tensions
We have developed a globally consistent framework showing cross-country GDP vulnerabilities to an escalation in China-Taiwan tensions, factoring in three key channels of risks: trade exposure to Taiwan and mainland China, wider economic and industry reliance on semiconductors for producing output and price ramifications of shortages and disrupted shipping.
Find Out More
Risks in our Q2 IFRS 9 and CECL scenarios more evenly spread reflecting monetary policy and geopolitical uncertainty
The Q2 update of our IFRS 9 and CECL scenarios services continues to see a moderate downside weight to risks around our baseline forecast. The direction of risks around the baseline forecast is informed by our Global Risk Survey which is compiled each quarter by a representative sample of our clients spread around the world….
Find Out More
Global Trade Education: The role of private philanthropy
Global trade can amplify economic development and poverty alleviation. Capable leaders are required to put in place enabling conditions for trade, but currently these skills are underprovided in developing countries. For philanthropists, investing in trade leadership talent through graduate-level scholarships is an opportunity to make meaningful contributions that can multiply and sustain global economic development.
Find Out More