Brown's spending plan gets industry backing
Monday 02 November 1998
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.
- 1 Windows 10: man updates PC, wakes up to find porn slideshow on repeat
- 2 The 'world's most beautiful vagina' has been debunked by science
- 3 John Green schools morning show hosts after awkward interview with Cara Delevingne
- 4 Bulletproof armadillo puts Texas man in hospital after shot bounces off hard shell
- 5 Doctors declare war on Jeremy Hunt over weekend working 'myths' amid plan for seven day NHS
Whoopi Goldberg tells Cara Delevingne to suck it up: 'She's not famous. I'M famous'
John Green schools morning show hosts after awkward interview with Cara Delevingne
Jack the Ripper's final victim set to be exhumed following new theory on the killer's identity
Supermodel Gisele Bundchen mocked for wearing a burka to avoid being seen visiting plastic surgeon in Paris
Bulletproof armadillo puts Texas man in hospital after shot bounces off hard shell
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Calais crisis: The seven claims made about the migrants - and the reality
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...