UK faces hard road ahead, says CBI
The coming year will be a hard road for the UK, but the country needs to "get on" with rebalancing the economy away from government and household debt, a business leader has said.
CBI director-general John Cridland predicted that 2012 could be the beginning of a more prosperous future if the economy becomes stronger and the "pain" of deficit reduction passes as quickly as possible.
But the CBI boss warned that continuing weakness in the eurozone still posed a "significant threat" to the UK as around half of exports go to Europe.
Mr Cridland said that to make up for cuts in public spending, the private sector needed to deliver £170 billion of new investment over the next five years.
In his New Year message, Mr Cridland said: "2012 is going to be a hard road but if we are canny and act now to put in place solid economic foundations, we will be stronger and secure a better future for ourselves and our families.
"We need to identify how the UK will earn its living and pay its way in the years ahead and that means adjusting to change.
"The faltering recovery with family and business budgets under pressure and the on-going crisis in the eurozone are stark reminders of the need to rebalance our economy away from household and government debt.
"There are no easy answers when it comes to securing future long-term growth. The hard graft of rebalancing is the only way it can be achieved, so it's time to stop talking about it and get on with it.
"If we fail, the UK's debts will continue to grow and our trend growth-rate will remain low. Only through rebalancing can we return growth to long-term sustainable levels."
The CBI said that the unprecedented economic stability between 1993 and 2007 masked "growing imbalances" in the UK economy, which has become dominated by debt-driven household and government consumption.