World Economy

UK Businesses Urge Cameron to Cement Economic Future

UK Businesses Urge Cameron to Cement Economic Future UK Businesses Urge Cameron to Cement Economic Future

David Cameron is being urged by business leaders to be bolder and more ambitious in cementing Britain’s economic future, having won a majority in last week’s general election.

The plea comes as new figures show continued improvement in the jobs outlook, particularly in manufacturing. But there are signs that the low inflation rate is encouraging many employers to hit “the pause button on pay”, Investment Week reported.

John Longworth, director general of the British Chambers of Commerce, is leading the calls from business for the prime minister to display more robust leadership.

In an open letter, he asks Cameron to use his “strengthened mandate to take bold action” on key issues and “above all, prime minister, be ambitious”.

He adds: “Fight the Whitehall culture of incrementalism, risk aversion and inertia that stops much-needed change. Only then can business and government, together, work to ensure that a prosperous, confident UK can pay its way in the world in the decades to come.”

Katja Hall, deputy director-general of the business lobby group CBI, said that the new government “should prioritize building on the progress made to get the deficit down, finding more innovative ways to deliver public services and backing the final decision from the Airports Commission so we get diggers in the ground by 2020”.

Fundamental Reform

Longworth promised the prime minister continued support in the search for a new settlement for Britain in Europe. Business wanted “fundamental reform” and safeguards against economic decisions affecting Britain being taken by the eurozone nations.

Cameron should not be afraid to create “bold tax incentives” to encourage companies to make long-term investments and “tame regulatory burdens”.

Longworth’s priority issues also included a long-term partnership with government to “kindle an export revolution”. He said business wanted to see a public spending plan for fiscal consolidation with “growth, not austerity” as the watchword.

Boost for Cameron

The latest batch of surveys on the economy released on Monday provide a boost for Cameron.

The CIPD, the human resources professional body, paints a “positive picture for employment prospects” in its quarterly review of the jobs market covering more than 1,000 employers.

The proportion of employers expecting to increase recruitment levels in the second quarter was higher with a “significant confidence boost” in manufacturing and production.

The difference between the proportion of employers planning to recruit or reduce labor in manufacturing jumped from 28% in the first quarter to 51%.

But such optimism is not matched by the outlook on pay, where the CIPD expects the first-quarter 2% increase in pay packets to slip to 1.8% over the next 12 months.

Gerwyn Davies, CIPD analyst, said: “Word has spread that inflation is expected to remain very low this year, so it’s no surprise many employers are hitting the pause button on pay.”

A Lloyds Bank review covering the English regions and Wales, compiled by Markit, shows robust increases in business activity and new work last month, led by the North East.

UK EU Renegotiation

Cameron has already started talking about renegotiating Britain's relationship with the EU. Jose Manuel Barroso, the former President on the EU Commission, said other European leaders were willing to contemplate proposals made by Britain.

Barroso said it was important for the EU-based on principle of freedom of movement of goods, services, capital, people – to have such an internationally relevant nation as Britain as a full member.

Barroso advised the UK to discuss issues with partners before negotiations, saying that tone is important.

"If it appears as now the government of Britain going against European integration, that is not going to be received by other colleagues," he said.