On Monday, George Osborne and Vince Cable announced a fundamental review of the steps all areas of Government are taking to promote the best conditions to encourage growth in the private sector.
Businesses are encouraged to take part in the review which is designed to challenge all departments within the Government on the measures they are taking to bring down barriers to growth.
An initial report, based on the evidence obtained from businesses and umbrella companies, will be presented no later than next year’s Budget day. By that date, all government departments will have to have submitted an action plan laying out the contributions they are going to make.
The first two priority areas are the reformation of structural barriers including corporate governance and access to finance and the removal of barriers in the sectors where obvious growth opportunities already exist.
Sectors such as business services, construction, digital and creative, health and life sciences, manufacturing and retail have already been identified as priority areas for improvement. However, all sectors will be subject to a forensic review.
Also on Monday, the OBR released its Economic and fiscal outlook in which it upgraded its prediction for GDP growth this year to 1.8% but reduced its forecast for next year to 2.1%.
In June, the OBR had forecast growth of 1.3% for this year, but firms rebuilt their stocks faster than expected. Growth in construction has been unsustainably strong over the last 6 months but this will unwind and lead to weaker growth in the short-term, OBR forecasters said.
It is also expected that the UK economy will continue its recovery from the recession, but more slowly than witnessed in the 1970s, 80s and 90s.
The sluggish medium-term outlook is in some ways attributed to the VAT increase in January which is predicted to reduce quarter to quarter growth to 0.3% in the first quarter of next year.
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