Imposing an “arbitrary and unfair tax on the energy industry” is the worst way to help the economy Richard Lambert, CBI director general said in a speech yesterday.
Lambert said market forces must be allowed to work through the system: “There are no silver bullets to halt the decline in the housing market, or to shoot the economy rapidly back on to a growth path.”
Lambert told his Glasgow audience that the country must instead learn from the past to strengthen the economic climate: “Britain faces a big challenge from the economic slowdown and the credit crunch. The country has faced challenges like these before, and it is important that we all heed the lessons of history”
“Back in the 1930s, the US helped to turn a recession into a depression by building trade barriers. We must absolutely not allow this mistake to happen again.”
Members of society which will feel the strain under market forces should be protected, Lambert said, citing the government’s recent moves in the housing market. But this help “must come in a form that makes economic as well as social sense.”
Future government policies should be tested by whether they “will help create more jobs and more investment when recovery comes”.
Lambert said the one sure way to restore consumer confidence was by maintaining macroeconomic stability: “There’s growing pressure on the Bank of England to cut interest rates. But the hard won credibility of our system could be jeopardised if the Bank moved too quickly at a time when inflation is still moving sharply higher”.
Lambert also said the focus must be on the long-term health of the economy, such as education and training, or the shift to a low carbon economy.
“We must also build on those comparative advantages that will serve us in good stead when the recovery comes. These are what will get us through the tough times, and leave us in the best possible shape to be ready for the upturn.”