Brown's spending plan gets industry backing

THE CONFEDERATION of British Industry yesterday backed the Chancellor's ambitious spending plans, and warned that there was a danger of industry talking itself into a recession.

The CBI, on the eve of its national conference, said that Gordon Brown should increase borrowing, rather than scale down the public spending plans he announced in the summer.

Kate Barker, CBI Chief Economic Advisor, said: "Provided the economic slowdown does not turn into a recession, the consequent rise in public borrowing should not require a spending plan review. Indeed a panic reviewcould be economically damaging."

Adair Turner, CBI Director General, said a budget deficit that ran to as much as 2 per cent of gross domestic product (GDP) was "perfectly OK".

The CBI endorsement came as Mr Brown was finalising details of his pre- Budget statement, which he will make to the House of Commons tomorrow.

Even though weaker-than-expected economic growth means the government will receive less money in tax and pay out more in benefits, the Chancellor is expected to say that he will be able to meet his spending commitments without breaking his "golden rule" - that is, only borrow to invest.

This assertion was directly contradicted yesterday by the National Institute of Economic and Social Research (NIESR), one of the country's leading think tanks. NIESR predicted that public borrowing will exceed net investment by a total of pounds 23bn over the life of the current parliament.

NIESR, which also predicted that growth will slow to 1.1 per cent next year, said: "This means that the golden rule of matching investment with borrowing will be broken."

Meanwhile, a survey released by the CBI yesterday highlighted the dangers of industry talking itself into recession. It found that while only 47 per cent of firms were gloomy about the prospects for their own business next year, 83 per cent were pessimistic about the outlook for the economy as a whole. As a result, just over half of firms surveyed backed the CBI decision to call for a 0.5 percentage point cut in interest rates at this week's meeting of the Bank of England's monetary policy committee.

Mr Turner said: "The fact that so many more firms are concerned about the overall economy highlights the danger of talking too much about recession. We must stop a UK recession from becoming a self-fulfilling prophecy."

A separate study released today by the Institute of Management reveals that confidence among business leaders has fallen to its lowest level for two years. The Institute's confidence indicator sunk to 24 per cent in the third quarter, down from 33 per cent in quarter two.

voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
voicesSiobhan Norton on why she eventually changed her mind
ebookA unique anthology of reporting and analysis of a crucial period of history
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Life and Style
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn