Businesses urge government action to boost shrinking economy
Britain’s government must take bold steps to boost investment, and the Bank of England should drop its resistance to buying company loans in order to get the economy out of recession, the country’s largest business lobby said on Friday.
The call by the British Chambers of Commerce (BCC) for sweeping, potentially debt-financed measures to boost growth heaps further pressure on Chancellor George Osborne, who has warned that any fiscal loosening could cost Britain its top credit rating.
The BCC said the government is already set to miss its goal to erase the deficit within five years, as the economy looks likely to shrink this year and a meaningful recovery remains elusive due to the drag from the Eurozone debt crisis.
However, a near-term spending boost accompanied by plans to rein in spending on welfare, pensions and public services was possible without losing investors’ trust, the BCC said.
Swift action was needed to support business investment, incentivise job creation, and stimulate construction, particularly in the housing sector, the BCC said.
“These measures will have to be funded either by making tough choices within the existing spending envelope, or by using the UK’s market credibility to support limited extra borrowing,” the lobby group said.