Digby Jones, director-general of the Confederation of British Industry, has strongly criticised standards of adult literacy and numeracy in the UK, calling for greater levels of investment and incentives for smaller firms to encourage training to take place.

Speaking just before Christmas in the annual CBI New Year's message, Digby Jones said that problems with skills shortages would not be solved unless investment was vastly increased: "The UK has come a long way but the government and business need to invest far more to avert the inflationary pressure caused by skill shortages. We also need to raise levels of adult literacy and numeracy where UK standards are a national disgrace. We support all that the government is doing in this area, but there is so much more to do."

Over the next year, the CBI will lobby for incentives for smaller firms to provide more training for staff so that skill shortages do not hold back company growth as one of its key priorities. It will also push for an extension in capital allowances for growing businesses to stimulate investment in new equipment and help boost productivity. Digby Jones also asked for immediate further action to redress decades of under-investment in transport, education and training, which are vital if the UK is to be competitive as a business-friendly location.

Key to the New Year message was a call for greater tax incentives to encourage companies to invest across the board. Digby Jones set down a challenge to policy makers to put investment at the top of the political agenda as a key response to the predicted global economic slowdown which will see companies profits decreasing.

"Economists predict that world economic growth will slow from 4.5 per cent in 2000 to around 3.5 per cent in 2001," he said. "There is every reason to be hopeful that the global economy will avoid a hard landing. But slower economic growth leads to lower profits and less investment. So we could be storing up problems for the long-term, particularly in the hard-pressed manufacturing sector.

"That makes it vital for 2001 to be a year of investment. The government must offer more incentives to invest in new equipment and innovative business opportunities. It must deliver the infrastructure and skilled workforce needed to keep the UK high up the world investment league table."