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Innovative policies in the coming year’s budget could give a “more dramatic” turnround in the British economy, stimulate investment and help make firms more efficient, Britain’s leading business organisation said on Monday.
The CBI published a report, jointly written with the bank HSBC, that warned that stuttering investment was holding back productivity.
The government should ensure it is “preparing itself for the long-term”, said Caroline Clegg, CBI chief economist.
“A bold Brexit plan, multi-speed growth, an effective budget for 2019/20, more investment in productivity, and efforts to boost growth and help make firms more efficient would all help to spur on innovation and make Britain’s economy more productive,” she said.
Almost all the 1,000-plus members of the CBI’s Future Institute think tank backed more investment in UK research and development. Only 59 percent of the industry body’s members considered it a priority.
Pledges to crack down on the intellectual property and copyright abuses of tech companies such as Google, Facebook and Microsoft would support investment, the report said.
George Bridges, economist at the CBI, said business figures were “obviously all concerned about Brexit”, but said it was necessary to understand how to develop an economy, not just Britain’s standing in the world.
“We’re told we have been in a pretty muddled period and that is the point at which investment needs to happen,” he said.
CBI figures showed that innovation has lagged behind productivity growth by 11 per cent over the past decade. An estimated £70bn of investment has been lost since 2010, and if investment were at its previous peak it would be worth almost £1tn today.
The CBI identified three problems: a shortage of creative and tech talent, a lack of infrastructure, including broadband and transport, and a lack of skills in both innovation and production.
A well-funded Tech City technology cluster in east London would be ideal to revive the UK’s life sciences sector, but the rapid immigration of tech workers from other countries is hampering UK companies’ ability to recruit, it said.
The report also said the government needed to make gains from the fall in the value of the pound. Investors needed information about how the government intended to spend this windfall.
Rising inequality would be worsened if investment, which should increase middle-class incomes, was less stimulated by lower corporation tax, it said. If that happened, the investment gap between the rich and poor would widen.