According to Britain's leading business group, Rishi Sunak should funnel billions of pounds into free childcare to help get more people into work to deal with acute workforce shortages.
The Confederation of British Industry said the government needed to announce extra funding and changes to childcare and early years support, arguing that a more accessible and affordable system was an immediate economic priority.
As much as 9 billion of investment is needed to improve the system and expand free childcare to one and two-year olds, according to the lobby group, which represents more than 190,000 businesses across the country.
It comes as the government faces growing demands to expand the 30 hours of childcare for three to four-year olds in England, with different schemes in Scotland, Wales and Northern Ireland.
The CBI said changes could help firms grappling with record numbers of job vacancies, despite the fact that parents in Britain faced the most expensive childcare costs in the developed world.
The intervention before the spring budget of the chancellor Jeremy Hunt comes as Ministers review options for increasing participation in the workforce after an exodus of missing workers since the Covid epidemic.
Nearly 9 million working-age adults are neither inactive nor looking for a job, including men and women who care for their families, according to official figures.
The study shows inadequate access to childcare prevents about 1.7 million women from taking on more hours, amounted to more than 28 billion dollars in lost economic output a year, and adds to the cost of living challenges.
As many as three-quarters of firms in Britain have been hit by labour shortages over the past 12 months, with more than 1 m vacancies nationwide, due to a rise in early retirement and long-term sickness, as well as tougher post-Brexit rules limiting migrant labour.
The former prime minister Liz Truss urged Sunak not to abandon her proposals on childcare changes, including plans to scrap mandatory staff-child ratios in nurseries and increase funding by 20 hours a week. She faced opposition over the ratio plan due to concerns over the quality of care, while business leaders are understood to favor expansion of funding.
In its submission to the budget, the CBI said solving labour shortages was one of four key priorities for business. It called for a package of investment reliefs to offset the planned rise in corporation tax from 19% to 25% from April, and also called for an expansion of financial support for firms with their energy bills.
Tony Danker, the director general of the CBI, said that an end to the government's super deduction tax break and the rise in the headline rate of corporation tax would have a huge impact on investment in the UK.
He said the economy can't break out of its low growth trap, but we need to take action on business investment to achieve it.
The tight labour market and economic inactivity are a big concern for businesses across all sectors. With more than 1 m vacancies and UK parents facing some of the highest childcare costs in the OECD, we need immediate action to solve the labour challenge.
Without it, businesses are left to grow, invest and become more productive with one hand tied behind their backs.