Miliband: UK economy needs profound change

Ed Miliband said the coalition was taking a gamble with growth and jobs

Ed Miliband has warned that "profound change" is needed to ensure the UK's economy does not return to recession.

The Labour leader called for better regulation of financial firms and urged the coalition to focus less on cutting the deficit and more on aiding growth.

Without new thinking the economy risked "sleepwalking" back to disaster, he told the CBI conference in London.

But the Conservatives said Mr Miliband offered no credible plan to deal with the deficit.

The Labour leader's speech followed the publication of the government's Spending Review, which set out plans for cutting the budget deficit by £81bn within four years.

The Conservatives and Lib Dems argue that this pace of change is necessary to rebalance the books quickly and improve the UK's economic competitiveness.

'Pro-business'

But Labour says the predicted loss of 490,000 public sector jobs due to cuts will stall the recovery and have a huge knock-on in the private sector, possibly leading to a "double-dip" recession.

In his first speech to the CBI since becoming Labour leader last month, Mr Miliband promised to continue New Labour's "pro-business" approach, but warned: "Without profound change in the way we manage our economy it seems to me we are at risk of at best sleepwalking back to an economy with the same risks as we saw before the recession hit."

Although he agreed the structural deficit had to be tackled, Mr Miliband said the said the speed of the coalition's plans represented a "big gamble with growth and jobs".

He added: "Even more importantly, it doesn't address the deeper risks and flaws in our economy.

"I think to think that deficit reduction is the only answer for our economy is actually to be quite pessimistic about what our economy can achieve.

"I believe we need to take a different and more optimistic approach, an approach that sees deficit reduction as a start not an end and is willing to learn the more profound lessons of the crisis.

"It's only this that will truly serve the interests of British business. It's only this that will insulate business from the risks that are part and parcel of the financial services industry. It's only this that will support the creation of British businesses that can lead in the global economy of tomorrow."

Mr Miliband's speech came ahead of the publication of preliminary GDP figures from the Office for National Statistics for the third quarter of 2010 on Tuesday.

Some economists expect them to show slower growth than in the previous quarter.

'Won't fool anyone'

After Mr Miliband's address, CBI director-general Richard Lambert said: "This was a well-judged speech for a business audience, which acknowledged the critical role of entrepreneurs and small businesses.

"Although Mr Miliband recognized the importance of cuts, he disagreed with government on the pace. The CBI firmly believes that the budget deficit must be tackled during the lifetime of this parliament."

Michael Fallon, the Conservative Party's deputy chairman, said the previous Labour government had "destroyed growth and led to the longest and deepest recession on record".

He added: "Their attempts to re-write history on the deficit won't fool anyone. Ed Miliband can't accuse the government of lacking a plan B when he's been leader of the Labour Party for a month and still hasn't set out a plan A for cutting the deficit.

"Only once Labour have set out a credible plan will they be able to talk about growth."

Earlier, Prime Minister David Cameron promised the government would employ a "forensic, relentless approach" to ensuring the UK's future economic growth.