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Economic growth by 2012 or UK will never recover, warns CBI

If the UK economy fails to meet growth expectations by 2012 it will be impossible to restore public finances, warns CBI director general Richard Lambert.

Lambert says if the economy doesn’t grow as hoped over the next few years, unemployment will not fall back to its pre-crisis levels and the opportunities for young people will be seriously impaired.

He says: “Without growth, it will be next to impossible to restore the public finances to health, no matter how far spending is cut. Without growth, businesses will look elsewhere in the world to invest, and the huge investment that is needed in our country’s infrastructure – in power generation, transportation and the like will be in jeopardy.”

Lambert says achieving an annual growth rate of 3 per cent over the next five years rather than 2 per cent would yield around 300,000 more jobs and an additional £35bn reduction in the public sector deficit.

But to get the economy on to a balanced, sustainable growth path, he says: “It means setting out a credible pathway back to fiscal stability. It means placing the emphasis for the necessary fiscal consolidation on current spending, rather than on the capital investment which is vital to our future prosperity or on increased taxes.

“It means making the right choices about those elements of public spending that are necessary to support jobs and investment in the future, and which therefore need protecting through a period of fiscal austerity.”

Lambert also says to achieve sustainable growth, it must be recognised that private sector capital is increasingly mobile, and that corporate and personal tax rates are a key determinant in the decisions that are made on the location of investment.

He adds: “Fifth and last, it means sending clear signals about the future direction of policy for critical infrastructure projects.”



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  1. This report from the CBI must be read by David Cameon as he will be likely to be in charge in a few months. Yes, they are dead right, wiuthout significant economic recovery of growth the country is finished, however that recovery will not be be made in banking and finance. The recivery will not be symmetric. It will be very asymmetric if indeed recovery does take place. Indeed it will only happen if we see a massive recovery in industrial outpout, that is the increased output and necesssary investment in internationally tradable manufactured goods and similar productive services. As profits and Corporation Tax receipts fall, which was totally predictable years ago, alternativ e sources of tax revenue and falls in government spending must take place., Government spending will have to fall by £50 billion and tax revenue by propbably more, however taxes on the factors of production or those activities which can bring in tax revenue , MUST be reduced. Chancellor Darling has shown a total ignorance and lack of understanding by increasing income taxes to the highest in the free world and increasing NI contributions. We will need the following.
    Removal of NI contribitions on the first £20,000 or earnings, especially for those working in productive industry, free depreciation on investment in machinery and factors of manufacturing production, abolition of business rates on manufacturing premises and finally a new tax system which will discourage refinancing of business takeovers by allowingh teh tax relief on loans./ bond issues to finance the take over and cancelation fo shares in besinesses, because the loss of corporation tax by this ‘thin market capitalisation process’ has caused devastation to the UK and loss of all corporation tax receipts, but making the cost oif such debt serivcing tax allowable., It has subsidised the take over of theUK by Foreigners, who have then undseinvested in the business or more usually asset stripped it and closed it down. To rebuild the UK manufacturing and create the necessary 3 million new jobs and abolish out apalling balance of trade deficit requires this investmnent and increase in useful jobs. THe public sector will have to shrink by 2 million jobs. The Proportion of GDP spent by the Govenment will have to go back to the good old days of about 1997 when it was 35% p.a. ( it is now heading for 50%) Finally taxes will have to rise massively on consumer spending which will have to fall on the import of manufactuired goods, the import of which has crushed the life of the UK. So VAT will have to be variable according to the product to which it is applied and the range of goods and services extended. I believe that VAT receipts will have to be increased 50% to balance damaging taxes elsewhere. It has taken Brown, 13 wasted years to turn a trade balance and govenment spending covered by taxtion as it was under Clark and Major in 1997 , to turn the UK into the economic wasteland which it now is. Finally where will the money come from to create the necessary power stations to replace those soon to be closed. The German and French ownsers of virtually all our power generation will make us pay dearly for our crass stupidity of selling of all our assets to foreign asset strippers. Was there any worse decision that G Browns decision to sell off Westnghouse the UK owned Nuclear Power Station construction company to Toshiba, at a time when the UK need to build 12 nuclear power stations.

    It will take more than 13 years of investment and hard labour from all to see a recovery. Never will our living standards reach those of the main countries of Europe agains unless we have economic growth of 4% per anum compoiund for the next 12 years. That task is near superhuman and will require immediate sacrifices in living standards by all to pay for the vital investment in rebuilding the UK. We will have to save more, work harder and longer, scrap all public sector waste, import less, make and export more and be more self sufficient and much more nationalistic in our attitudes.
    just as our competitors are. We will have to have the same restrictions against closing factories down as apply elsewhere in France and Germany. Can Cameron do it? Does have the understanding of the problems, will to tackle the appalling mess which he inherits and realisition of the agenda necessary. Finally can he sell the real understanding of the quantum of the problems as well as the agenda to repair the UK and will the notorioously fickle UK public throw him out after 5 years because they could not take the foul tasting medicine necessary to put to rights the 13 years of Gordon Brown and Blair. The UK economy is as broken now as it was at the end of the 2nd World War. What a task ahead. If he fails to show he has the formula and the will to impose it, then there will a headlong race to get money and the brains out of the country by the flood of economic migrants who will give up in despair.

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