Vince Cable, the Business Secretary, will deliver a blunt warning today against “complacency generated by a few quarters of good economic data” just 48 hours after George Osborne claimed Britain was finally “turning a corner”.
In a fresh demonstration of Coalition tensions over economic strategy, the Liberal Democrat minister will also signal his fears over the risk of a fresh housing bubble as property prices rise “out of control”.
The Chancellor chose the backdrop of a London building site on Monday to declare that the economy was recovering and that the evidence of recent growth figures suggested “our plan is working”.
But Mr Cable will produce a more cautious assessment in a speech to business leaders today, saying there are “encouraging signs of recovery”, but that it can only be secured by sustained investment by business which was still lagged behind other major industrialised nations.
“We can’t rest on our laurels. The kind of growth we want won’t simply emerge of its own volition,” he will tell a Government/CBI industrial strategy conference at Warwick University.
“In fact, I see a number of dangers. One is complacency, generated by a few quarters of good economic data.”
Mr Cable will put himself at odds with Mr Osborne’s strong rejection of claims that Government subsidies for the housing market meant that Britain was experiencing “the wrong sort of growth”.
The Business Secretary will say: “It isn’t difficult to see evidence of confidence returning, and there are positive trends in production. Taken together with success stories like the car industry and export growth in emerging markets, we have the beginnings of a recovery story.
“But there are risks, not least the housing market getting out of control. Recovery will not be meaningful until we see strong and sustained business investment - and this is still 13% down on its 2008 peak and, as a share of GDP, is currently the lowest in the G7.”
In a rebuff to Conservative right-wingers, he will also stress the need for the Government to have an industrial strategy, following a series of “classic market failures”. Such an approach dismays some Tories who regard it as intervention by the state in private business.
Chuka Umunna, the shadow Business Secretary, said: “This is an embarrassing slap-down to George Osborne’s deeply complacent and out of touch speech this week.
“But it also reminds everyone that you can’t trust a word the Lib Dems say. Vince Cable has supported the Chancellor’s policies which choked off the recovery in 2010.”
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