Boris Johnson called on George Osborne to “junk talk of austerity” and ramp up investments in housing, road and rail to boost economic growth.
The London mayor used a speech at Davos to renew his opposition to expansion of Heathrow airport, attacking what he called the government’s “panda-like pace” in addressing London’s air capacity crunch.
Setting out a seven-point plan for growth, Mr Johnson called for a housebuilding programme, new rail connections across London, a “sensible” visa policy and for critics of banking to “stop bashing industries in which London is strong”.
The comments came as the chancellor rejected suggestions by Olivier Blanchard, chief economist at the International Monetary Fund, that Britain should reconsider its fiscal position in light of sluggish growth. Official figures on Friday showed the UK economy shrank 0.3 per cent in the last three months of 2012.
Mr Johnson told a lunchtime audience of British business leaders at the World Economic Forum: “We need to junk talk of austerity and recognise that the single biggest inhibitor of demand is lack of confidence … only some of the people in this room would invest some of the cash in their balance sheets we would see that confidence rewarded in a virtuous circle.”
His call for a fresh infrastructure drive was echoed in earlier comments by Nick Clegg, who said the coalition had cut capital spending too deeply when it came to power in 2010.
Warning that London’s population was expected to rise by 1m by 2030, Mr Johnson reiterated his call for investment in Crossrail 2, the underground rail link proposed between Chelsea and Hackney, and new road crossings across the Thames.
“We need to invest in the rail and road infrastructure that will get the workforce of London and the southeast to their jobs on time and that is critical to our competitiveness,” he said.
Mr Johnson, who supports the creation of a 24-hour, four-runway hub airport either at Stansted in Essex or in the Thames Estuary, said the expansion of Heathrow airport would be “a delusion and a disaster”. He called on business leaders to look at the “extraordinary potential” of the alternatives at Stansted or at the two estuary sites, saying they could be “very largely financed” by some of the international investors at Davos.
A report this week by consultancy Oxera found that construction of a new airport hub would require up to £30bn in government subsidy and would not be “commercially viable”.
A person close to the mayor denied reports that he was cooling on the idea of an Estuary hub, saying that all three options remained “on the table”.
Commenting on the disappointing GDP figures released on Friday, Mr Johnson said: “This morning’s news demonstrates why the chancellor is pursuing measures now that will boost confidence, further stimulate demand and bring growth, through investment in housing, transport and infrastructure.”
Mr Johnson, who was joined at Davos by Gerard Lyons, his newly appointed chief economic adviser, said he would set out in the coming months a “coherent programme for the development of London”, and calling on the private and public sector to join forces on its implementation – “as we did for the Olympics”.