SUBSTANTIAL government backing for major infrastructure projects is needed to galvanise the UK’s nascent economic recovery, a leading business group has warned.
The CBI is calling on Chancellor George Osborne to take “urgent steps” in this month’s spending review, which will be dominated by another round of heavy cuts to Whitehall budgets.
Total savings of £11.5 billion are being targeted.
However, CBI director-general John Cridland is calling for increased infrastructure investment to bolster fragile economic growth. The CBI says this could be paid for through further public sector reforms, including a reduction in automatic pay rises and the integration of social care spending into the NHS budget.
“If the government doesn’t act now even less infrastructure could be built in the years ahead, as cuts from the last spending round continue to feed through and decisions on major projects remain up in the air,” Cridland said.
“To bridge the gap, the Chancellor needs to press ahead with short-term action to improve roads and boost the supply of housing. He also needs to identify a pipeline of transformational projects and make sure their red ribbons are cut at the earliest opportunity.”
The CBI joins other business groups such as the British Chambers of Commerce, which have also prioritised capital investment as a means to get the economy back on track.
The spending review takes place on 26 June.