The government has been urged to take action in four key areas if the economy is to resume sustainable growth.
The CBI, in a letter written to the Chancellor, George Osborne, and the Business Secretary, Vince Cable, set out what it believes are the foundations of economic growth: macro-economic stability, the right regulatory climate, the right taxation regime, skills, and labour market flexibility.
But the open letter, which was sent ahead of the government’s white paper on growth strategies, insisted that extra measures are needed if the recovery is to succeed.
The business group identified four areas where short-term action is required.
The first is backing vibrant and growing SMEs, especially in innovative sectors. To boost such firms, the CBI said it wanted the government to extend the Enterprise Finance Guarantee, making sure it fits the needs of IP-intensive businesses where banks find it hard to extend loans in the absence of physical collateral. There should also be encouragement of more SME funding options, especially non-bank and equity financing.
The second is supporting exports to rapidly-growing regions of the world. In the CBI’s view, the government should play a central role in helping businesses to export by providing information, contacts and financial backing. In particular, the Export Credit Guarantee Department’s product range should be made more accessible and suited to the financing needs of SME exporters. The government should also reduce constraints to trade such as cumbersome customs procedures, ineffective IP legislation and protectionism in public procurement systems.
The third is exploiting demand for domestic projects in energy, waste and flood management.
The fourth is a reform of public service delivery. The CBI argued the case for reforms that encourage competition in the delivery of public services, including transparency on costs and performance, and improvements in shared services, procurement and outsourcing.
