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British PM says entrepreneurs key to recovery

posted 25 Oct 2010, 10:52 by Mpelembe   [ updated 25 Oct 2010, 10:54 ]

British Prime Minister David Cameron offers support for innovation and start-ups at meeting of UK business leaders, as a review of government spending cuts 500,000 public sector jobs.

LONDON, UNITED KINGDOM (OCTOBER 25, 2010) ITN - British Prime Minister David Cameron announced support for entrepeneurs and innovation on Monday (October 25), as he urged companies to power the UK's economic recovery by ploughing money into investment.

Speaking to business leaders, Cameron sought to switch the focus of debate on the economy to growth -- after unveiling cuts last week which may cost half a million public sector jobs.

"The new jobs, the new products, the new ideas that will lift us up will be born in the factories and offices you own. Not in the corridors of Whitehall," Cameron said at the annual conference of the Confederation of Business and Industry.

The government owns large stakes in Lloyds Banking Group and Royal Bank of Scotland but is frustrated that they and other banks are not lending more to smaller firms to help power economic recovery from a deep recession.

"To create the growth, jobs and opportunities we need, we've got to back the big businesses of tomorrow -- not just the big businesses of today. That means opening up access to finance, creating an attractive environment for venture capital funding, getting banks lending to small businesses again, and insisting that a far greater proportion of government procurement budgets are spent in small and medium-sized firms," he said.

The coalition wants to unlock 200 billion pounds of public and private sector investment in infrastructure to boost growth.

It has earmarked 40 billion pounds of government money for transport, energy and communications projects and is hoping the private sector will quadruple that.

Cameron also announced a 200 million pound investment in the next four years for research into new technologies, bringing together university researchers and business.

The Conservative-Liberal Democrat government, in power since May, unveiled departmental spending cuts last week totalling 81 billion pounds over four years to help virtually eliminate a record budget deficit of 11 percent of GDP.

Delivering the ambitious austerity plan will be a test of strength for the coalition, the first to govern Britain since 1945.

Opposition Labour politicians and some economists have said cuts of such severity could drive the economy back into recession, given broad signs it is slowing after a strong rebound at the start of this year.

Economic growth figures for the third quarter on Tuesday are expected to show a marked slowdown from the 1.2 percent growth registered in the previous three months.