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UK's Cameron to switch focus to growth

Britain's Prime Minister David Cameron will seek to switch the focus to boosting economic growth on Monday after unveiling deep spending cuts that some economists fear could plunge Britain back into recession.

business Updated: Oct 25, 2010 14:40 IST

Britain's Prime Minister David Cameron will seek to switch the focus to boosting economic growth on Monday after unveiling deep spending cuts that some economists fear could plunge Britain back into recession.

Cameron's speech to the Confederation of British Industry, a leading business group, comes a day before third quarter growth figures and other data this week expected to point to further housing market weakness and a drop in consumer confidence.

That could raise fears of a return to recession and give ammunition to critics of last week's spending review.

Cameron's coalition government slashed public spending by 81 billion pounds ($127 billion) to tackle a record budget deficit of almost 11 per cent of national output.

The government is looking to the private sector to grow and replace the near 500,000 public sector jobs expected to disappear because of the spending cuts.

Cameron is due to announce a 200 million pound investment in the next four years in Technology Innovation Centres, bringing together university researchers and business.

He will also give further details of a national infrastructure plan and how to unlock 200 billion pounds worth of public and private sector investment.

"To build that new dynamism in our economy, to create the growth, jobs and opportunities Britain needs, we've got to back the big businesses of tomorrow, not just the big businesses of today," according to advance extracts of his speech.

ECONOMY TO GROW?

Cameron will also say that access to finance must be opened up, venture capital funding encouraged, and banks again must start lending to small businesses.

Business Secretary Vince Cable brushed aside predictions of poor economic growth data. Analysts expect Tuesday's quarterly gross domestic product growth to come in at 0.4 per cent, compared to the previous quarter's 1.2 per cent.

"Nobody knows what will happen in the future ... all that we can do is rely on a genuinely independent forecast. The government relies on the Office of Budget Responsibility, it suggests that there will be continuing growth, but it will be difficult," Cable told Sky news.

CBI Deputy Director General John Cridland said he was confident the economy would grow in 2011, adding that it was critical that the government stick to its austerity plan, which is an effort to safeguard Britain's triple-A credit rating.

"I think it's absolutely sensible that we stick with the plan. If we give those international investors any sign that we have a plan B, they'll go and build things in China, rather than in Britain," he told the BBC.

Cameron, who leads the Conservative party in the coalition with junior partner the Liberal Democrats, will say he wants to "bridge the gap" between innovation and commercial success.

"The fact is that we are not as good as some of our competitors in turning great ideas on the drawing board into prototypes in a laboratory and actual goods and services people can buy", he will say.