NEW economic targets focusing on growth as well as government spending would help the government boost the UK economy in the long run, a leading business group said today.
The Institute of Directors (IoD) called on George Osborne to target sustainable economic growth of three per cent per year, and a 35 per cent ratio of public spending to GDP by 2020.
These targets should be policed by the Office for Budget Responsibility (OBR), the IoD said, because of its powerful independent voice.
Meanwhile the Confederation of British Industry (CBI) called for changes to planning rules to promote major infrastructure projects.
Current rules are too complicated and slow, reducing incentives to invest and damaging long-term growth, the group believes.
The IoD claims the government can reach a growth rate of three per cent through supply side reforms which would incentivise investment, improve education and boost enterprise and competition.
“Without a radical policy shift soon, underlying growth could fall to half this rate,” said IoD boss Simon Walker.
A smaller state would also make the UK more competitive, the IoD believes, and is particularly important target because of the rising pressure an aging population puts on public spending.
Meanwhile the CBI argued the government’s proposals to free up planning rules can be improved.
The group wants further streamlining to take place and for more advice to be given to applicants in the early stages of the planning process.
“We’re suggesting ways the Government can fine-tune the system to spur on much-needed new infrastructure, such as energy plants, railway lines, airports, roads, ports and waste facilities,” said the CBI’s Neil Bently.
“Investing in major infrastructure projects will bring big rewards for our economy, with new jobs and growth. But investors both at home and abroad must have the confidence that the planning system will deliver timely decisions, so the Government needs to act now.”