The UK economy is “highly reliant” on household consumption and needs rebalancing, warns the Confederation of British Industry (CBI).
The economy has become dependent on debt-driven household and government consumption. Attention needs to be turned to investment and exports in order to generate long-term growth, particularly as the austerity measures start to shrink the public sector, the CBI notes.
“To make up for the loss of public sector spending, the private sector needs to deliver £170 billion of new investment over the next five years, so it’s time to power-up and get on with rebalancing”, says John Cridland, director-general of the CBI.
“The Government’s National Infrastructure Plan recognises the urgent need to make substantial investments to upgrade this country’s infrastructure, which will mainly come from the private sector, so there is a huge opportunity here for businesses”, he adds.
Renewable energy is seen as a means of stimulating business investment while decreasing energy imports. The CBI predicts a surge in interest in this sector as North Sea oil and gas production declines.
Overseas, the UK has also previously missed opportunities to capitialise on export markets in high-growth economies such as the Bric – Brazil, Russia, India and China – nations, but greater emphasis on these partners could generate a £20 billion boost by 2020, acording to the CBI.
The healthcare, education, finance, transport and digital sectors are all highlighted by the CBI as potential growth markets in emerging economies.
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