Belfast Telegraph

CBI urges ministers to protect growth

The Confederation of British Industry (CBI) will today urge the Government to protect economic growth in the forthcoming spending review, which is likely to result in the most savage cuts for a generation.

Amid mounting fears that the recovery is stalling and Britain could face a double-dip downturn, the CBI will say that ministers must prevent this by protecting investment in areas that foster growth.

The warning comes as a respected think-tank, the Centre for Economics and Business Research, prepares to downgrade its forecasts for the world economy today. It will reduce its expectation for global GDP growth in 2011 to 3.4% from the 4.1% it predicted three months ago, blaming weakness in the US economy.

On Friday, the Organisation for Economic Co-operation and Development also gave warning that the world economy was proving weaker than expected in the second half of the year and that governments might need to consider putting off austerity measures if the weakness continues.

The CBI's concern is expressed in its submission to the Treasury ahead of next month's spending review. The Government announced in the Budget that it would make £32bn of annual cuts by 2014-15 to bring Britain's soaring public-sector deficit under control.

The CBI agrees that spending must be limited to "avoid major tax rises that would damage our economy and undermine competitiveness". But it says investments in areas that facilitate growth must be protected if the economy is not to be tipped into another tailspin. These include investment in Britain's creaking infrastructure, research and development, and human capital through education and skills training.

John Cridland, its deputy director-general, said yesterday: "The Government rightly decided to limit public spending. The alternative would have been tax rises and other consequences that would have damaged the economy. Cutting spending means tough choices. We think the need for economic growth, not the noise of the loudest voice, should determine where cuts are made."

A source at the Treasury said: "We welcome the CBI's submission, which shows that businesses on the front line of the economic recovery support the Government's action to deal decisively with the unprecedented budget deficit in order to avoid damage to the economy that would last for years to come."