By Daniel Hunter

Sir George Cox, the former General of the Institute of Directors, has said that short-termism has become an entrenched feature of British business and is damaging economic growth.

In his report, commissioned by the labour party, Sir George stresses that overcoming a focus on short-term gains is the only way to ensure the UK economy grows.

He recommended making changes to executive pay so some rewards were based on longer-term results.

"Short-termism curtails ambition, inhibits long-term thinking and provides a disincentive to invest in research, new capabilities, products, training, recruitment and skills," he said.

Labour have welcomed the review and said that short-termism had "failed our economy".

Sir George said the economy would only grow if short-termism were overcome, adding: "Economic growth needs to become an objective, with strategies to achieve it, not a forecast on which all other decisions are dependent."

Shadow chancellor Ed Balls said: "Sir George's report sets out a clear plan for creating that more long-termist economy including radical reforms to executive pay, tougher rules on takeovers and encouraging longer-term shareholding and we will now study his detailed proposals as part of our policy review.

"It's vital that we take action to kick-start our flatlining economy, but now is also exactly the right time to make the long-term changes we need to make our economy stronger, more balanced and better able to attract new investment and create skilled jobs for the future."

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