LONDON (Reuters) - If the government wants to use this month’s Budget to boost growth and job creation, it should concentrate on medium-sized companies, Britain’s biggest business group said on Monday.
John Cridland, director general of the Confederation of British Industry, said there was no silver bullet to fire-up the economy but a wealth of small measures that could encourage investment and remove barriers to growth.
“Mid-cap companies are Britain’s forgotten army,” he said. “This is where growth and jobs are most likely to come from.”
The government has already pledged to use its March 23 Budget to support growth, an issue that has become more urgent after data showed the economy lurched into reverse gear at the end of 2010.
Speaking to the Conservative Party conference in Cardiff this weekend, Chancellor George Osborne said his March 23 Budget would be “unashamedly pro-growth, pro-enterprise and pro-aspiration”.
The CBI said access to capital was often the biggest barrier to growth and urged the government to improve the attractiveness of the corporate bond market for medium-sized firms.
This could be done, it said, by providing guarantees to portfolios of securitised debt and by engaging with market participants to establish private placement and bond documentation standards.
Although the CBI said growth should be the government’s top priority, it endorsed its aggressive approach to deficit reduction.
“The government is rightly not allowing itself to be blown off course,” Cridland said.
The coalition government announced plans last year to slash public spending in order to wipe out a record budget deficit over the next four years.
The Labour Party says the government is cutting too fast and risks plunging the country back into recession.
The CBI reiterated its call for a more business-friendly taxation system, urging the government to broaden the definition of business assets under Capital Gains Tax and to pledge to reduce the top rate of personal income tax as soon as conditions allow.
“The 50 pence tax rate is a disincentive to invest in the UK,” said Cridland. “We’re not calling for it to be reduced now but we do want a roadmap which would signal an intention to bring it down in the future.”
Reporting by Christina Fincher; Editing by Jon Loades-Carter