By Richard Johnstone | 23 November 2011
The government should use independent Office for Budget Responsibility advice to match planned spending cuts to the strength of the economy, a leading think-tank has said.
Ahead of Chancellor George Osborne’s Autumn Statement next week, the Institute for Public Policy Research today issued a report setting out ten ideas for growth.
Among these were a more active role for the OBR in deficit reduction. Fiscal consolidation should be less severe in any year where the OBR expects growth of less than 1.5%, the IPPR says.
In the current economic climate, this would mean the government slowing cuts until the economy was judged to be growing strongly enough to absorb them. This would be a ‘pragmatic’ response in the face of turbulence from the eurozone.
The think-tank concludes that recovery from this recession will be the slowest on record. It argues that allowing the pace of spending cuts to be linked to growth could boost the economy later. It might also mean that the programme of retrenchment will have to be extended.
The IPPR also added its voice to calls for an increase in transport spending. The CBI has campaigned for greater roads investment, and Prime Minister David Cameron promised on Monday that the Autumn Statement would outline a plan to ‘transform the nation’s infrastructure’.
Other suggestions among the IPPR’s ten ideas for growth include the establishment of a National Investment Bank as part of releasing credit to businesses, and an increase in free childcare places to encourage parents back to work.
IPPR director Nick Pearce said that greater pragmatism on deficit reduction was essential. He added: ‘The plan for growth should aim to increase demand in 2012 but also deal with the long-term structural weaknesses in the British economy that are holding us back.’
A lobby group representing small businesses has called on Osborne to take steps to make it easier for them grow.
The Forum of Private Business has called for more government support of firms looking to export for the first time, and joins controversial calls for the fuel duty increase planned for next year to be postponed.
The government should use independent Office for Budget Responsibility advice to match planned spending cuts to the strength of the economy, a leading think-tank has said.
Ahead of Chancellor George Osborne’s Autumn Statement next week, the Institute for Public Policy Research today issued a report setting out ten ideas for growth.
Among these were a more active role for the OBR in deficit reduction. Fiscal consolidation should be less severe in any year where the OBR expects growth of less than 1.5%, the IPPR says.
In the current economic climate, this would mean the government slowing cuts until the economy was judged to be growing strongly enough to absorb them. This would be a ‘pragmatic’ response in the face of turbulence from the eurozone.
The think-tank concludes that recovery from this recession will be the slowest on record. It argues that allowing the pace of spending cuts to be linked to growth could boost the economy later. It might also mean that the programme of retrenchment will have to be extended.
The IPPR also added its voice to calls for an increase in transport spending. The CBI has campaigned for greater roads investment, and Prime Minister David Cameron promised on Monday that the Autumn Statement would outline a plan to ‘transform the nation’s infrastructure’.
Other suggestions among the IPPR’s ten ideas for growth include the establishment of a National Investment Bank as part of releasing credit to businesses, and an increase in free childcare places to encourage parents back to work.
IPPR director Nick Pearce said that greater pragmatism on deficit reduction was essential. He added: ‘The plan for growth should aim to increase demand in 2012 but also deal with the long-term structural weaknesses in the British economy that are holding us back.’
A lobby group representing small businesses has called on Osborne to take steps to make it easier for them grow.
The Forum of Private Business has called for more government support of firms looking to export for the first time, and joins controversial calls for the fuel duty increase planned for next year to be postponed.
