As the Liberal Democrats gather in Brighton, some of the discussion will focus on how to build a stronger, more productive and increasingly inclusive economy. The Director General of the British Chambers of Commerce argues that at a key component of this debate should be consideration of how to cut the costs of doing business.

On a recent visit to Lancashire, I met some incredible businesses from the manufacturing, construction, retail, and hospitality sectors. They all told me how squeezed they felt by rising cost pressures. 

But the picture that emerged from our conversations, wasn’t just of the pain businesses are feeling, but of the consequences. One firm said it had previously taken on 25 apprentices, but this year, under the weight of mounting costs, it is hiring just one. 

That story, unfortunately, is repeated across the land. British Chambers of Commerce research shows the cost stack facing a typical small or medium-sized business, built up from a decade of government policy decisions, has increased by more than 70%. A quarter of that increase has landed since the Autumn Budget of 2024. 

Ask business owners what worries them most, and the answer isn’t complicated: inflation, taxation, and business rates, in that order. According to our latest survey, just 17% of firms say they plan to increase investment in the coming months. That’s the lowest level since the pandemic.

 This should worry us all. Every pound a business spends absorbing higher costs, is a pound that doesn’t go towards hiring a young person, upgrading technology, or lowering prices on the shelves. An economy that works for everyone, depends on businesses having the confidence to back themselves. Currently, too many are hamstrung by costs outside their control before they even get the chance to hire, invest, or grow. 

 That is why, ahead of this year’s Budget, the British Chambers of Commerce is calling for urgent action to cut the cost of doing business.

 First, we must tackle the NEETs crisis. Over a million young people out of education, employment or training is a national scandal. Employers want to do their bit, but the incentives to hire young people have been removed, while the risks have grown and the environment toughened. An Employer’s National Insurance holiday for under-25s would make it cheaper and easier for firms to take on a young person rather than pass them over. 

 Second, we need to ease the burden of two key costs, energy and business rates. Firms across the country tell us that these bills are eating into the budgets they would otherwise put towards expansion and growth. We know Liberal Democrats agree that reform is long overdue. Reducing these burdens would help unlock investment and boost the economy in the communities and sectors where investment is needed most.

 Third, we need to back exporters. International trade is one of the fastest routes to economic growth, but it gets comparatively little attention. It won’t have passed any Liberal Democrat by that trade has become more complicated in recent years. There is a pressing need to rebuild a closer trading relationship with Europe, cutting friction at the border and giving exporters the certainty they desperately need. SMEs also need consistent, locally delivered export support, to give them the confidence to explore new markets. 

At the heart of the Liberal tradition is a belief in freedom: the freedom for individuals to pursue their ambitions, for communities to shape their own futures, and for businesses to innovate, invest and create jobs. During Saturday’s “Liberal Democrats Mean Business” policy debate, we therefore urge attention to be given to how to reduce the burdens on British businesses, to enable just that.

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* Shevaun Haviland CBE is the Director General of the British Chambers of Commerce. Shevaun is not a Liberal Democrat member and writes here as a guest contributor.