Warning business needs new relationship with government

UK business needs a "fresh relationship" with the government, the boss of a major lobby group has said.

Shevaun Haviland, of the British Chambers of Commerce (BCC), issued the warning ahead of speeches from Chancellor Jeremy Hunt and Labour leader Sir Keir Starmer on Wednesday.

She said it was a "pivotal moment for the voice of British business" with an election looming in 18 months' time.

Her comments come as many firms are being squeezed by higher costs.

Opening the BCC's annual conference Ms Haviland said companies had been hit by "eye-watering" energy bills, rising interest rates and a "cripplingly tight labour market".

"I am under no illusion about just how challenging these times are for anyone in business. They tell me everyday," she said.

"But let me be upfront and frank, business needs a fresh relationship from government."

In his speech, Mr Hunt defended his handling of the economy, adding there was "nothing automatic" about controlling inflation, which is the rate prices rise at.

He said independent forecasters believed the government was on track to meet its pledge to halve the annual rate of inflation, which is currently at 10.1%.

However, some economists have previously said that inflation is due to fall naturally as energy and commodity prices ease, rather than due to specific government policies.

In response to pressure from Conservative MPs and businesses to cut taxes, Mr Hunt told the BCC conference his focus had to be on controlling inflation.

"What I would say to people worried about levels of taxation is: I agree with that, we have to get our taxes down, particularly our business taxes down," he said.

"But the worst tax of all is inflation, because inflation is tax which you get nothing back for in return."

Sir Keir is due to address the conference later on Wednesday and will promise to expand housebuilding under a Labour government.

As well as the two main political party leaders, Andrew Bailey, the governor of the Bank of England, will also deliver a speech.

The Bank is responsible for setting interest rates and keeping inflation at its target rate of 2%. The current rate is five times that.