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Businesses and Tory donors attack 'high-tax economy' after PM's shambolic speech

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The head of Britain's main business lobby has urged Boris Johnson to "stop hiking taxes and focus on boosting investment" in a direct attack on the Government that signals fears that the growing burden of the state threatens to stifle the economic recovery.

Lord Karan Bilimoria, president of the Confederation of British Industry (CBI), will today respond to the Prime Minister's poorly received speech to the organisation with a rebuke.

The founder of Cobra beer will say: "The Government have said they want a high-wage, high-growth, high-investment, high-productivity economy. Business agrees. But right now, we are facing a high-tax economy."

The rebuke for Mr Johnson will come after senior Tory donors last night also attacked tax rises and some declared their cheque books closed. Business leaders who have donated millions of pounds to the Conservatives echoed the cabinet minister Lord Frost's argument this week that Britain must cut taxes to make Brexit a success.

The City tycoon Michael Spencer, the former Tory party treasurer who chairs the Centre for Policy Studies, argued that "this country has to achieve economic growth and it can't with a high tax, high spend policy". 

The entrepreneur, one of the Conservatives' biggest financial backers, added that "we need to keep our pressure on the Prime Minister - we won't achieve high rate economic growth with high tax and high levels of spending". 

Some of the Prime Minister's closest supporters in business are growing increasingly frustrated by his stumbling leadership. 

His speech outlining his pro-business vision to the CBI on Monday attracted widespread criticism after he seemed unfamiliar with what he was saying, compared himself to Moses and talked about the "very safe streets" at Peppa Pig World.

Despite growing calls among business leaders for taxes to be cut, Tory donors said they do not get the impression that change is coming.

One Tory donor, who asked not to be named, said he feels so "deeply, painfully disappointed" by the current leadership that his cheque book is now "closed" and he believes that "four-fifths of my contemporary donors - large-scale donors in their 60s - feel exactly as I do".

Another prominent Tory donor, Alexander Temerko, the Ukrainian-born businessman who runs the energy cable company Aquind, added that the Government needs to "lower taxes to stimulate business investment, especially in infrastructure projects. Otherwise, we are going to lose any advantage that Brexit may bring".

Mr Temerko said: "It will lower the investment attractiveness of the UK, and Brexit will be one of the largest missed opportunities for this country. In addition to cutting taxes, it is also paramount to significantly cut regulatory red tape." 

Lord Bilimoria, a crossbench peer, will highlight increases in National Insurance and corporation tax under Mr Johnson.

He will tell the CBI conference: "All the while business rates still need fundamental reform and the burden of property tax in the UK is four times higher than Germany, three times higher than the OECD average, and higher than any other G7 country.

"Together, this all adds up to the UK having the highest tax burden in 70 years."

Lord Frost said during a speech at a Centre for Policy Studies conference earlier this week that Brexit will fail if the UK does not lower taxes, arguing that the private sector "isn't just a source of taxes" and must not be a "convenient way of keeping the public sector running".  

Lord Bilimoria will say the Conservatives are imposing "one tax burden after another" by ramping up national insurance and corporation tax, while failing to encourage growth in a move that could undermine hopes of the UK becoming a more productive post-Brexit.

"We are bouncing back but it is a very fragile recovery, because we have had one challenge after another, from queues at the petrol pumps to an energy crisis, to labour shortages across every sector, to supply chain challenges, the pingdemic and inflation now," he will tell the CBI on Wednesday.

"On top of that, now is not the time to put up taxes. We have got taxes at their highest level in over seven decades. High taxes can be a problem, it can stifle a recovery." 

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