The CBI has called on the Government to invest in transport infrastructure ahead of the forthcoming spending review.
The business organisation said Chancellor George Osborne should prioritise areas that foster the economy’s ability to grow, and invest in: infrastructure; knowledge assets such as and research and development; and human capital via education and skills.
In particular, the CBI emphasised the importance of transport infrastructure, as “this offers high returns and will play a crucial role in boosting domestic and international trade”.
It added: “As well as direct Government investment, barriers to private sector investment in energy and communications infrastructure also need to be addressed, for example, by simplifying the planning regime.”
The CBI called for work on Crossrail and upgrades to the London Underground network to continue, but suggested that all public sector transport projects “undergo more rigorous value for money assessments”. It also wants a reduction in the number of Highways Agency contracts.
Ian McCafferty, CBI chief economic adviser, said: “Cuts will necessarily affect GDP growth in the short term, but smart choices will give the economy the ability to grow. The Government must use its limited resources to support a healthy private sector recovery so it can pick up the slack from the public sector.
“Given the very high returns that new infrastructure offers, the planned cuts to net public sector investment are a concern. Public sector capital investment should be returned to 2.25% of GDP as soon as possible. We also need to invest in building up our knowledge and skills base as this will help boost our competitiveness.”