Business 'drowning' in red tape – CBI

Red tape is throttling the economy and the Government should start a deregulation drive to support growth, the Confederation of British Industry argued today.

The business lobby group, which is led by director general John Cridland, right, estimates that fresh regulation enacted in 2011 alone has imposed a £177.7m cost on the economy.

The Government is implementing a "one-in, two-out" rule on new regulation from next year to curb the proliferation of red tape. But the CBI insisted this does not go far enough.

Chief policy adviser, Katja Hall, said that mushrooming regulation was a "major barrier to growth" and warned that smaller enterprises faced the greatest difficulties. "Small and medium-sized businesses are the engines of growth, but they are telling us they are drowning under the weight of extra regulation coming out of Whitehall," she said.

In another indication of the fragility of the economy, unemployment figures to be released on Wednesday are expected to show a rise in Jobseekers' Allowance claimants in November.

Philip Shaw, the chief economist at Investec, said he was "pencilling in" a 5,000 jobless rise for last month. This would follow October's 10,000 increase which was the largest jump in dole queues in 13 months. The number of JA claimants has been above 1.5 million since 2008, when it leapt sharply from 900,000 as the recession first took hold.

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