CBI wants housing market to lift economy out of downturn

Ben Southwood
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THE UK’S top business lobby this morning called on the government to use next week’s budget to boost the housing market, to help solidify the faltering economic recovery.

The Confederation of British Industry (CBI) laid out a package that would shift £2.2bn from current spending to capital investment, and which the industry group says should “form part of a fiscally-neutral budget”.

Chief among their suggestions was a call for the government to add £1.25bn to its existing Affordable Homes Programme. It claimed that the initial cash injection will build 50,000 extra affordable homes, generate some £18bn of output, and create 75,000 jobs.

Along with this move, the government should slash taxes on renovation and repair work on homes, a step the CBI says would add a further 80,000 jobs for at most a £500m hit to the budget.

And the group called more generally for extra measures to boost the UK’s international competitiveness as a place to do business.

It wants a tax cut on infrastructure spending, capping the hike in business rates to two per cent, freezing air passenger duty, and abolishing stamp duty reserve tax for firms listed on the Alternative Investment Market (AIM).

“The government must stick to its fiscal plan but now is the time to kick-start confidence,” said CBI director-general John Cridland.

“Our measures will provide another boost for the housing market and will benefit first-time buyers, those trapped in negative equity and those looking to refurbish their homes,” Cridland added.

“With its relatively short lead-in times, house building offers the most bang for buck in growth terms – unleashing pent-up demand while creating jobs and growth.”

The chancellor is expected to try and keep it safe in his 2013 budget, to be delivered 20 March, after the furore surrounding the so-called pasty and granny taxes that came out of his 2012 budget decisions.