The head of the UK’s top business group has said the Government must deliver a clear strategy for growth with the next Budget as it downgraded its forecasts for the British economy.
But John Cridland, the new director general of the CBI, said he was confident the Government was “redoubling its efforts” after his predecessor, Sir Richard Lambert, accused the coalition of failing to put forward a vision for the economy.
Mr Cridland also said it was looking for signals that the Government was drawing up a road map for reforming personal taxes to stimulate growth, but did not expect any material changes in the next Budget on March 23.
His comments came as the CBI revised its forecast for growth in output in 2011 to 1.8% from an “already sluggish” 2%. Economic growth in 2012 was downgraded to 2.3% from 2.4%, with the CBI warning that conditions will remain subdued for the following two years as household spending remains low and Government cuts gather pace.
But the statistical impact of December’s severe weather – which sent the economy into a shock 0.5% decline in the final quarter of 2010 – will also have a significant bearing.
Inflation is expected to be slightly higher than its previous forecast throughout 2011, as commodity prices continue to soar, before gradually declining throughout 2012. The CBI still expects an interest-rate hike between April and June this year but the group is confident a double-dip recession is unlikely and predicts a rebound to economic growth in the first three months of this year.
In his final speech, Sir Richard took a surprise swipe at the Government, accusing them of choosing “politics over economics” on too many occasions.
Mr Cridland said: “The Government intends to have a strategy for growth by the day of the budget. We’re working alongside to help them with the formulation of that strategy. But looking beyond budget day, if we are still without a strategy there will be concern.
“I’m confident they have got our message – especially after Sir Richard’s comments – and will redouble their efforts.”
Mr Cridland said he was looking for three key areas in the Government’s growth strategy – business investment, export promotion and job growth. He also said CBI members were keen to see the Government open up to personal tax reforms, to ease the burden on UK entrepreneurs.