David Prosser: How will we rebalance the economy?

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The Independent Online

Outlook Elsewhere, there will be doubt for a time yet about where the 490,000 public-sector job losses will occur (not to mention the 500,000 reduction in the private sector PricewaterhouseCoopers predicts as a knock-on effect), which will continue to undermine the prospects of consumer-facing businesses. And after a quiet day on the stock market, it was noticeable last night that defence stocks are reacting badly to the defence cuts announced on Monday.

Still, there are some glimmers of hope that the Government is prepared to back up its rhetoric about shifting the balance of Britain's economy away from financialservices. The £1bn commitment to a carbon-capture project in the energy sector is welcome, even if it was slightly undermined by E.On withdrawing from the bidding for the project only hours before the Chancellor's speech. Protection for the science budget will be welcomed by hi-tech manufacturers.

These are piecemeal measures, however, and what we do not have yet is a coherent vision for promoting these sectors and an export-led recovery as a whole (which reduced funding for UK Trade & Investment is hardly going to encourage).

With the spending review over, this is the next challenge for the Government. And if it really wants to hit the economic growth targets for 2011 and 2012 on which all its spending and borrowing assumptions depend, there is not a moment to lose.