The Confederation of British Industry (CBI) has urged the government to allocate more funds in the forthcoming Budget to boost housing market, by building 50,000 affordable homes.
The project at a cost of £1.25bn ($1.87bn, €1.43) would generate £18bn within the wider economy and create about 75,000 jobs, CBI said. It also proposed tax incentives for refurbishing empty homes, extension of housing guarantee scheme to all types of housing and more investment in roads and infrastructure. Further, business rates should be capped at 2 percent, suggested Britain's largest business lobbying group.
The CBI projects the total costs of its plans at about £2.2bn, which could be generated from savings within government departments and property sales. It expects the Budget on 20 March to be fiscally neutral, which would shift £2.2bn from current spending to high-growth areas.
"The government must stick to its fiscal plan but now is the time to kick-start confidence," CBI director-general John Cridland said in a statement.
"Our measures will provide another boost for the housing market and will benefit first-time buyers, those trapped in negative equity and those looking to refurbish their homes."
CBI expects the UK economy to grow 0.3 percent in the first quarter of 2013, after the economy contracted in the previous quarter.
The Council of Mortgage Lenders earlier said that the seasonally adjusted housing starts in the country were 26,830 in the fourth-quarter of 2012, down 45 percent from the March quarter peak of 2007. In the construction sector, output declined by 6.3 percent month-on-month and 7.9 percent year-on-year in January.
Another business group, the British Chambers of Commerce, also called for more investment in housing and infrastructure, even if it results in further cuts to welfare benefits. It asked for 100,000 additional houses to be built by the coalition or housing associations by 2015.