LONDON Dec 3 The British government should
focus on infrastructure projects to boost its economy over the
next two years, a think tank has said.
A forecasting group backed by accounting firm Ernst & Young
said on Monday a 14 billion pounds ($22 billion) hike in
infrastructure spending over two years would add 0.5 percent to
Britain's GDP, improving short-term economic growth prospects.
The Ernst & Young ITEM Club said infrastructure spending had
almost halved to 27 billion pounds over the past four years
despite spending being the most effective means of stimulating
"The key to this policy is finding projects for which all
the planning and logistics have already been completed, and
where all that is missing is the funding to put the shovel in
the ground," said Andrew Goodwin, senior economic adviser to
Ernst & Young ITEM.
Goodwin said the investment could be allocated to transport
projects such as roads or work on hospitals, schools or other
The call came as George Osborne prepares this week's
half-yearly fiscal statement in which the British chancellor is
expected to stick with his deficit-reduction programme.
At his "Autumn statement" on Wednesday, Osborne is set to
defend his stringent economic policies as the only credible way
of solving the government's biggest political problem - its
failure to deliver a strong recovery.
"It's clearly taking longer to deal with Britain's debts,
it's clearly taking longer to recover from the financial crisis
than anyone would have hoped, but ... to turn back now ... would
be a complete disaster for our country," he said in a BBC
Economists believe Osborne will have to find substantial new
savings to meet one of his debt-reduction goals - removing
Britain's underlying budget deficit.
British media reported on Sunday that Osborne planned to
reduce the amount very high earners can put tax-free into
private pensions each year alongside reining in the welfare
Reducing the amount of money people can pay into their
pensions with tax relief could raise up to 1.8 billion pounds
($2.88 billion), according to the Sunday Times.
Osborne declined to comment on the reports, but did not
reject the proposals directly when questioned in the interview.