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Market confidence in deficit reduction strategy could collapse without credible plan for growth

24 November 2011

Market confidence in the recovery and deficit reduction plan could collapse unless the government comes up with a credible strategy for reviving the UK economy. This is according to a submission to the Autumn Statement published tomorrow (24 November) by The Work Foundation. The submission argues that the Chancellor must reject short-term fiscal boosts and focus resources on tackling the deep, long-term imbalances within the economy.

 
The submission identifies the three major structural problems as: chronic underinvestment by private and public sectors; severe and growing imbalances between successful and struggling parts of the country; and a continued over-reliance on risky, unsustainable sources of growth (such as finance and property). Unless they are addressed, these challenges will not only drag down growth in the short-term, but will also restrict the UK’s long-term prosperity.
 
The submission undertakes an analysis of these problems and sets out five key priorities for the Autumn Statement:
 
a)  Bring forward large-scale investment in transport, energy and broadband infrastructure;
b)  Vastly expand investment in innovation policies, using funds to bring together new technological developments and ideas and translate them into UK commercial successes;
c)  Maintain the UK’s position as the world-leading digital economy by re-shaping IP policy and funding mechanisms to support innovation in global markets;
d)  Close the regional innovation gap by giving resources and freedom to Local Enterprise Partnerships, and introducing proper incentives to build new homes en masse;
e)  Ensure that credit easing is effective in diverting money towards innovative SMEs, by funding these firms more directly rather than relying on the banks to allocate this funding.
 
Ian Brinkley, director of The Work Foundation, said: “While the Coalition has identified many of the right priorities on innovation and investment, it has yet to back them in a large-scale or co-ordinated fashion. With the UK facing one of the slowest economic recoveries on record, now is the time for the government to demonstrate its commitment to growth by moving forward in these areas on a far larger scale.
 
“If any short-term stimulus is required, it must be targeted at investment in areas which will also boost long-term growth, such as bringing forward more public investment projects, rather than on unsustainable tax breaks.”
 
ENDS
 
Notes to editors
 
  • Ian Brinkley is available for interviews, briefings and written comment.
  • The Work Foundation will be holding an Autumn Statement debrief on 30th November from 18.30 – 20.00. For further details please contact the press team on the number below.
  • The Work Foundation aims to be the leading independent authority internationally on work and its future, influencing policy and practice for the benefit of society. The Work Foundation is part of LancasterUniversity – an alliance that enables both organisations to further enhance their impact.www.theworkfoundation.com
 
Media enquiries:
 
Tom Phillips 020 7976 3554
tphillips@theworkfoundation.com
 
Anna Kharbanda 020 7976 3646
akharbanda@theworkfoundation.com
 
For urgent out-of-hours enquiries: Nasreen Memon: 07825 527 036