Britain can survive the cuts – CBI

By staff

The spending review will not cause the UK economy to fall back into recession, the outgoing head of the Confederation of British Industry has claimed.

Mr Lambert made the comments ahead of the CBI conference next week. He also expressed concern however that the government’s bank levy might stymie lending while the economy was fragile.

“The chancellor has got the strategic direction of this spending review right. He has stayed the course outlined in the June Budget, with economic growth a top priority,” he said.

The business organisation’s head argued private investment would return in the wake of the spending review, but required a “rebalancing” of regulation.

On the £2.5 billion bank tax, one of the more popular measures in George Osborne’s statement, Mr Lambert said: “I worry about bank levies because I think that they will be paid for by their customers.

“The shape of lending will be more subdued than would otherwise have been the case.”

Nevertheless, the CBI director general warned banks against paying out large bonuses during the spending review period.

“They need to be very, very, very careful about how they handle themselves and their compensation payments in the next few months,” he added.

“The politics are very raw. The banks must understand that.”