UK: budget opportunity to stimulate growth

UK: budget opportunity to stimulate growth
Published: 21 February 2012


The UK’s Construction Products Association (CPA) has written to the Chancellor in advance of his Budget statement next month, calling for the introduction of a range of practical policies that, whilst helping drive growth, will not endanger the government’s desire to achieve its medium term deficit target, but speed the country’s economic recovery.

Speaking about the Association’s proposals, Michael Ankers, Chief Executive of the Construction Products Association said: “Public sector capital investment, will still fall 26 per cent between 2010/11 and 2013/14 despite the announcement made last year for additional capital spending in housing, education and infrastructure. To ensure the UK economy is given the best possible chance for recovery, it is essential that government focuses on sustainable investment for growth. 

“The 2012 Budget provides the Chancellor with the opportunity to introduce a package of measures to stimulate the economy and deliver growth. This should include a further rebalancing of public spending away from current expenditure and into capital investment, as this will not only generate economic activity and employment but will increase long term productivity as a result of improving the infrastructure of this country.

“However, key to delivering the infrastructure that the country needs is the attraction of additional private finance to compensate for the shortfall in public capital investment and the use of additional quantitative easing to raise levels of housing supply.”

The CPA suggests that by purchasing bonds through its asset purchase scheme in a company that provides homes, government could increase housing provision so that the gap between housing supply and housing need does not increase further. This would also ensure that the quantitative easing is used in a manner that fully benefits the UK economy and that the Bank of England has another method for withdrawing the finance associated with quantitative easing in a swift manner without distorting one particular market.