British Prime Minister David Cameron promised on Monday to drive exports higher and cut regulatory red tape to encourage private sector innovation as his government seeks to replace tens of thousands of jobs lost because of harsh public spending cuts.
Mr. Cameron used his speech to the annual conference of the country’s leading business lobby group, the Confederation of British Industry, to strike an upbeat note for the economy after a week dominated by the cuts, the deepest since World War II.
To ensure growth after the recent recession, the British leader also laid out a 200 billion pound plan to improve the national infrastructure and plans to promote bank lending for small businesses and encourage greater private sector competition.
Mr. Cameron argues private sector growth will replace the 490,000 public sector jobs that are estimated to be lost as the government trims public spending by 81 billion pounds through 2015, axing many welfare payments and savaging government services.
“This is an incredible opportunity for Britain, for new start—ups to flourish, for innovations to drive growth and create jobs,” Mr. Cameron said at the conference in a hotel on London’s Park Lane. “To build that new dynamism in our economy, to create the growth, jobs and opportunities Britain needs, we’ve got to back the big businesses of tomorrow, not just the big businesses of today.”
Condemning as “shocking” the fact that Britain’s share of exports to China and India is just 3.2 percent, Mr. Cameron said he would call for structural reforms of the single market at a meeting of the European Council this week and would push for the completion of the Doha round of trade talks at the Group of 20 summit in South Korea next month.
Back home, the British leader is prioritizing the improvement of infrastructure, noting that congestion on roads costs the economy some 20 billion pounds each year and rail delays another 1 billion pounds while China builds new roads, rail networks and nuclear power plants.
“Other countries understand the importance of modern infrastructure to economic growth,” he said. “While they’ve been moving forwards, we’ve been standing still. Not any more.”
Up to 60 million pounds will be used to upgrade infrastructure at Britain’s ports to help foster progress in low carbon technology, particularly offshore wind, while another 200 million pounds will create a network of technology innovation centres linking university researchers with business.
Mr. Cameron stressed the role of start—up companies in Britain’s future, noting the rapid growth of companies like Google, Skype, Facebook and Twitter.
To help small companies grow, he promised to improve bank lending and lift barriers to entry and obstacles to growth. The government also plans to merge the competition functions of the Office of Fair Trading and Competition Commission to create “a much tougher and more streamlined competition regime.”
The government has raised the spectre of a Greece—style collapse in investor confidence, which would leave Britain facing punitive interest rates to finance its borrowing, to argue the need for the deep spending cuts announced last week.
Government departments will, on average, see their budgets cut by around 19 percent, but the government argues that the cuts will eliminate the country’s massive 156 billion—pound budget deficit by 2015.