Chancellor Rachel Reeves has been urged to make “long overdue” changes to government spending as the Confederation of British Industry (CBI) demanded greater investment in innovation. 

The Chancellor has previously said she is willing to “fight” for growth but leading economists have raised the alarm about an incoming recession. 

The CBI suggested that an economic boom could come if the government committed to spending 3.4 per cent of GDP on research and development (R&D).

Total spending on R&D for 2022 represented just under 2.8 per cent of GDP, according to Office for National Statistics (ONS) data released last year. 

Deep reforms to skills and training funding are essential to driving growth, the business group added. 

It advised the government to allow businesses to invest more of their contributions to the Growth & Skills Levy, which replaced a similar apprenticeships levy, on training staff. 

Louise Hellem, the CBI’s chief economist, described next week’s Spring Statement as a “pivotal moment”. 

“To unlock sustainable growth we must move beyond discussions to accelerate investment through targeted innovation as well as policy and regulatory reforms,” she said.