By Daniel Hunter
The Chancellor must 'stick to his guns' on deficit reduction, but 'supercharge' the delivery of infrastructure to drive growth, CBI Director-General John Cridland said today (Wednesday).
Speaking to Standard & Poor’s Infrastructure Finance Conference, he said that changing course at the moment would risk a backlash from financial markets.
He said the Government’s economic strategy was not wrong but that promised action to stimulate growth and infrastructure had not yet been fully implemented.
It comes after the CBI called on the Chancellor to pledge £1.25billion to build 50,000 affordable homes in the Budget and inject a further £500m into refurbishing existing houses through tax cuts and subsidies on repairs.
The UK’s leading business group has called on the government to prioritise road delivery and maintenance in the short-term, while pushing through high-impact projects and prepping the energy and roads sectors for private sector investment in the longer-term.
“The political clamour for the Government to change course has got much louder in the weeks since the UK lost its AAA credit rating," John Cridland, CBI Director-General, said.
“But the underlying facts haven’t changed. The downgrading had been long anticipated by the markets and doesn’t tell us anything we didn’t know about the economy.
“My gut instinct is that, as things stand today, the Chancellor must stick to his guns on deficit reduction. Instead of moving to a plan B or C or D, the Government must stick to Plan A+. The strategy isn’t wrong. It has infrastructure at its heart. It just hasn’t been fully implemented.
“Changing course in the Budget simply risks a backlash in the financial markets, forcing up borrowing costs and snuffing out fragile growth.
“But that doesn’t mean we can simply wait and hope for an upturn.
“The businesses I speak to all say that confidence is the missing ingredient in the economy — confidence to export, to invest and to grow. They’ve heard the language of austerity from ministers for three years but have not heard the language of optimism and growth nearly loud enough.
“So our members want to know what the Chancellor can do to raise confidence in the next three to six months, not just in the next three to five years.
“The Budget is a chance for the Government to act creatively to encourage the growth we need. And what makes most sense for growth is a focus on infrastructure.”
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