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.

PROMOTED VIDEO
News
ebooksNow available in paperback
Arts and Entertainment
Inner sanctum: Tove Jansson and friends in her studio in 1992
booksWhat was the inspiration for Finland's most famous family?
Arts and Entertainment
Singer songwriter Bob Dylan performs on stage
films
Arts and Entertainment
booksPhotographer Richard Young has been snapping celebrities at play for 40 years - but he says it wasn’t all fun and games
News
i100
Arts and Entertainment
Jenna Coleman, Peter Capaldi and Nick Frost star in the Doctor Who Christmas Special, Last Christmas
TV
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Product Development - Asset Management

£Attractive: Citifocus Ltd: High calibre individual with significant product d...

Citifocus Ltd: Credit Ratings - Banking Sector

£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...

Citifocus Ltd: Economic Crime Investigation & Analysis

£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...

Citifocus Ltd: Snr Risk Analyst - Capital & Liquidity

£Attractive: Citifocus Ltd: High calibre individual with superior academics an...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital
In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran