The CBI called for government to stick to its plans to reduce deficit while using extra resources to drive economic growth in the UK.
In its recommendations to Chancellor George Osborne ahead of next week’s Autumn Statement, the business organisation said the UK still has windfall money from the £7.8bn underspent last year and an estimated extra £4bn that will come from the sell-off of the 4G phone network.
The CBI urged government to spend £1.5bn on immediate high-impact measures, while stressing the importance of setting up a business bank that can bring lending levels to a “new normal”.
John Cridland, CBI director-general, said the organisation will judge the bank’s success on two fronts: “First, whether it improves the take up of existing products, such as UK Export Finance, the Enterprise Finance Guarantee and the Regional Growth Fund, which it should do by establishing a one-stop-shop. Second, the business bank needs to plug the finance gap for growing medium-sized businesses by providing a wholesale funding solution to deliver long-term ‘patient capital’.
Mr Osborne is said to be considering cutting pension tax relief, a measure the CBI warned against.
“Lowering the threshold below £50,000 is not a wealth tax – it’s an income tax which would hit swathes of middle-income earners.”