The CBI sent the Chancellor George Osborne a detailed growth strategy plan, arguing that improvements to UK infrastructure is crucially important.
In the letter sent to the Chancellor, the CBI encouraged him to kick-start growth by unlocking private sector investment and removing barriers to growth. The letter comes after a publication by the CBI setting out a plan it thinks will revitalise growth. The group’s call for government to act coincided with the disappointing Office for National Statistics (ONS) released on Wednesday.
The CBI has revised down its forecast for the UK economy in light of worries over the Eurozone crisis. It now expects GDP growth to be 0.9% in 2011 and 1.2% in 2012, down from 1.3% and 2.2% respectively.
John Cridland, CBI director-general said: “The Government must stick to its plans to bring down the deficit to maintain confidence in the UK’s public finances and keep the cost of borrowing down, but now is the time to revitalise its growth strategy and create a ‘Plan A plus’.”
“In uncertain economic times, confidence falters, investment grinds to a halt and job opportunities fade. This package of measures taken together could make a real difference to the economy, creating jobs and boosting growth in the years ahead.”
Its proposals are wide-ranging, from actions designed to boost investment in infrastructure, to stimulating the housing market and improving the roads, to supporting energy intensive industries, reforming the electricity markets and tackling youth unemployment.
Among the proposals are plans to prevent the exodus of the UK’s energy-intensive industries by giving a rebate to users on the carbon floor price. Companies in sectors such as steel, aluminium and chemicals are currently being hit hard by rising energy prices.
The CBI proposes targeting companies most at risk with a rebate, at an estimated cost of £300 to £400 million in 2013, and £600 to £700 million in 2015.
Another proposal that could benefit UK manufacturers is CBI’s suggestion of improving access to finance for small and medium-sized enterprises (SMEs) with a mid-cap bond market. This would form part of the Chancellor’s credit-easing plans.