Signs of economy picking up says CBI boss
JOHN Cridland, director general of the country’s largest business lobbying group CBI, says he can see genuine signs of recovery in the economy.
Speaking at a dinner hosted by Ernst & Young and attended by business and local authority leaders, Mr Cridland backed the Government’s localism agenda, and measures to boost housebuilding as key tools to further drive growth in the regions.
In a wide-ranging presentation which touched on key issues such as skills to funding and energy policy, he said last week’s GDP figures had given a hint that the economy is slowly moving forward.
On the GDP figures he said, despite the political and media excitement over the numbers, the reality was that the economy had been “pretty flat” over the last year, and beyond a symbolic level there was not a huge difference between 0.3% growth and a 0.1% contraction.
He said the GDP figures did give a hint that the economy may be slowly and steadily improving: “It is the first quarter, where without the Olympics or Diamond Jubilee, where it has smelled like genuine organic growth.
Taking recent improved data from manufacturers and exporters, a rally in confidence in the US, and a euro zone which despite the recent Cyprus crisis was “not as bad as it was”, he “took a punt” and estimated that the economy may see growth of 1% this year.
“If this is right this would be one of the best in Europe and would have been achieved from a flat start,” he said.
He said the CBI’s members were behind the Government’s austerity regime, but did question whether there is a clear growth strategy – particulary as it is made up of 225 “priorities”.
Although exports have been hit by the weakness of demand from the euro zone – which accounts for 50% of British overseas trade – he said exports to markets outside the eiro zone had increased 33% from Q1 in 2007.
While this was positve and vital to rebalacing the economy, he said it was crucial to keep selling British goods and services to emerging middle classes in fast growing economies.
“I was with the Prime Minister on a trade mission to India earlier this year. We are the 19th biggest exporter to India and we ran the country for a hundred years – Switzerland is 7th – so it shows the ground we have to make up.”
He said London was a “micro economy” fuelled by international money, and it is less a case of a “North-South divide, but London and the rest”.
“We need more than one world class city – and we still have some way to go to make sure other parts of the countyr have a route to growth.
He backed Lord Heseltine’s report on how to drive growth in other parts of the economy, but said resources should be focused toward maximising the strengths of local areas rather than by “trying to even-up growth by displacing it from fast-growing parts of the country to other locations.”
He said regional cities could drive growth and praised Manchester’s strong civic and business leadership.
“The important thing to achieve this is to persuade Whitehall to let go and hand decision-making power and funding to the cities where strong civic and business leaders can do more than committees of people in London.”
On the question of LEPS – business-led Local Enterprise Partnerships – he said the coalition should not replicate the mistakes of the previous government which gave the regional development agencies “too wide and too disparate a mission”.