Boris Johnson has been urged by the Confederation of British Industry not to return to austerity when the UK gets through the worst of the coronavirus pandemic.
CBI director-general Tony Danker is expected to tell the government its post-pandemic plan must be “more 1945 than 2008” and call for an economic strategy to last the next decade.
In a flagship speech, he will say the cuts imposed by the Tories after the 2008 financial crash helped stabilise the economy and public finances, but that “productivity growth flatlined, and our society is divided rather than united”.
He will call on the prime minister to instead take inspiration from the reconstruction that took place after the end of the Second World War, which saw the creation of the NHS and welfare state, as the UK recovers from Covid.
The speech came as chancellor Rishi Sunak prepares to deliver another Budget on March 3.
He has spent recent weeks warning Tory MPs that he will eventually have to raise money to plug the huge deficit run up during the Covid crisis, sparking expectations of tax rises and spending cuts, although these may be delayed to the autumn with the UK still in the grips of the pandemic.
But the chancellor has already been forced to deny that the UK is returning to austerity after freezing public sector pay for all but NHS staff and the lowest paid.
At a Bloomberg event, Danker is expected to say: “‘Build back better’ is easy to say but it is much harder to do. It needs a vision, a plan and a consensus as a nation to pursue it.
“I don’t think we did that after 2008.
“We stabilised the economic system immediately. Then for the long run, we stabilised the public finances. And we achieved modest economic growth.
“But our productivity growth flatlined. And our society divided rather than united.
“So, what will we take from this crisis? Where, in our darkest times, have we made real shifts for the better?
“Most notably – of course – in the aftermath of the Second World War, when post-war reconstruction gave birth to the NHS and the creation of the welfare state.”
Danker will urge Johnson and Sunak to use the moment to tackle “longstanding and perhaps endemic” problems like regional inequality, “persistently low” levels of business investment, no clear pathway on skills and weak productivity growth.
“Productivity in London is almost one third (32%) higher than the UK average, and over 50% higher than in Yorkshire & Humber – hitting living standards and wages,” he will say.
“And while the government’s levelling up approach has focused on public sector investment, there is little yet in place to tackle the business sector competitiveness of our regions.”
The CBI chief will urge the government to collaborate with unions, society and businesses around a shared economic vision that goes beyond traditional left-right ideology.
“Perhaps our greatest recurring weaknesses is our inability since 1945 to unite around a shared vision and economic plan of where we want to be,” he will say.
“For decades, we’ve oscillated between the view that either government should run the economy, or that government should just stay out of it.”
He will call for a 10-year economic vision “to overcome political cycles”, a move away from “adversarial policy” to “genuine collaboration”, and to involve businesses in delivering the plan.