By Marcus Leach
Chancellor George Osborne has announced that the government will underwrite £50 billion of investment in infrastructure and exports to try to lift the economy.
On Monday the International Monetary Fund (IMF) released a report that cut growth forecasts for the UK sharply. And now the Chancellor says he is using the coalition's "hard won fiscal credibility" to release private sector funds.
The IMF report said that wealth would grow by just 0.2% this year.
The underwritten money will be for those projects that have stalled because of a lack of money from private investors and could be in a range of sectors, including transport, energy, communications, and education.
Chief Secretary to the Treasury, Danny Alexander, sought to reassure people that the scheme would not be a drain on the public purse: "This is not a direct call on the taxpayer. That would only happen if something went wrong with a project."
Dr Adam Marshall, Director of Policy at the British Chambers of Commerce (BCC), said:
"Ministers’ newfound willingness to use the government’s balance sheet to kick-start stalled projects is a positive development, particularly as the BCC has called for urgent action on infrastructure for many months. The business community will be heartened to see the Treasury showing signs of innovative thinking on infrastructure financing. With luck, this indicates officials are willing to consider more radical funding options for bigger and longer-term projects.
“For too long, businesses have had to put up with deficient transport infrastructure that adds delays, uncertainty and cost. With traffic snarled on the A303 in the South West, the A1 and A19 in the North, and the A14 between the Midlands and East Coast ports to name a few, ministers must use both their chequebook and their legal powers to get Britain moving. The new scheme must also move swiftly to kick-start housing and energy projects — not tie them up in a long and complex application process.
“What's clear is that these announcements are long overdue. The question must be asked: when infrastructure investment provides immediate confidence, followed by jobs and greater competitiveness, what has taken Whitehall so long? Business expects speedy action, rather than yet more unfulfilled promises. Only visible results on the ground will make this announcement, and the government's National Infrastructure Plan, worth the paper they're written on."
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