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.”