Ministers are wasting easy opportunities to lift growth, leaving businesses “frustrated” with the lack of action, the CBI said as it predicted that GDP would shrink by 0.3pc this year – sharply lower than its outlook in May for 0.6pc growth, reports The Telegraph.
Demanding “swift action”, the British Chambers of Commerce (BCC) also cut its 2012 forecast, from 0.1pc growth to a contraction of 0.4pc, and warned that the Chancellor is on course to miss his deficit target by “two to three years” as borrowing balloons on the back of weaker than expected tax receipts.
Echoing calls from a growing number of economists, the BCC added the Government should consider “limited extra borrowing … to support business investment, incentivise job creation, and jump-start construction”.
The comments will heap more pressure on the Chancellor after the Institute of Directors last week described his growth strategy as “ineffective” and “too slow”. Despite unveiling two budgets for business, George Osborne now appears to be losing their support.
“There is frustration within the business community with the reality of what’s happening in the British economy,” John Cridland, director general of the CBI, said. “The Government needs to get better at delivery. It’s not frustration with the plan.”
John Longworth, BCC director general, said: “Business wants … a continued commitment to public spending cuts as well as a strong push to improve business access to finance and unlock massive private funding to renew Britain’s infrastructure. Politicians need to get some political backbone and show leadership.”
Mr Cridland warned that delays to infrastructure projects caused by messy planning and procurement processes were “not consistent with using infrastructure as a way of getting more nudge to the short-term UK growth plan”.
Both the CBI and the BCC also predicted that the government would borrow more this year and next than in 2011, despite austerity. The BCC said the overshoot would be “£14bn-£17bn in each year until 2015” and that “meeting the fiscal mandate probably take two to three years longer to complete”.
