Introducing a new permanent investment deduction to succeed the government's super deduction could boost UK business investment by up to £40 billion a year, according to a new survey from the Confederation of British Industry (CBI).
The survey of 325 firms suggests the super deduction has spurred investment. It also shows that 22% of investment qualifying for the super deduction would not have taken place in the UK without it.
Another 19% of investment qualifying for the super deduction has been brought forward to take advantage of the relief. The CBI says that announcing a permanent successor at the upcoming Spring Statement could increase annual capital investment by 17% by 2026, worth £40 billion a year.
If the super deduction expires without a successor, the CBI forecasts the UK will remain the lowest in the G7 for business investment by 2026.
Tony Danker, CBI Director General, said: 'The Chancellor's super deduction exemplified the boldness in public policy that we need to inspire investment and get the economy moving.
'Going by our survey results, it looks to be a real success. It's started the job but cannot be a one-hit wonder. Evolving the policy from short-term fix into long-term strategy will give firms confidence that government and industry are aligned.'