A major economic address by the Chancellor of the Exchequer, John Healey, has drawn sharply contrasting reactions from corporate employers and free-market economists ahead of next month’s Budget.

Mr Healey, the Member of Parliament for the South Yorkshire seat of Rawmarsh and Conisbrough and Britain’s chief finance minister, pledged to use the levers of the state in partnership with enterprise to revitalise national output. The strategy places particular emphasis on unlocking regional growth across the North of England by targeting high-growth companies and deploying public finance to crowd in private capital.

The Confederation of British Industry (CBI), which represents approximately 190,000 businesses across the UK, welcomed the government’s commitment to regional investment and regulatory reform.

Louise Hellem, chief economist at the CBI, said: “Business will welcome the Chancellor’s clear commitment to use every lever of the state – in partnership with business – to deliver the step change in growth the UK urgently needs.

“The Chancellor is right that growth is not an abstract prize: it is the route to putting the public finances on a sustainable footing and improving living standards in every part of the country. Fiscal discipline and a competitive business environment must go hand in hand if the UK is to win investment that might otherwise go overseas.

“Early action to unlock regional growth across the country is encouraging. Backing high-growth firms in the North and using the National Wealth Fund to crowd in private investment can help turn ambition and innovation into jobs, productivity and stronger local economies.

“Securing investment is essential to the UK’s long-term prospects, so businesses will be reassured by plans to tackle regulatory bottlenecks, speed up decision-making and give investors greater confidence. Cutting unnecessary regulation must now translate into faster delivery on the ground.

“Accelerating the growth of UK unicorns should be a national priority. New sandboxing powers can help de-risk innovation and give firms the confidence to develop next-generation products, services and technologies here in the UK, rather than looking abroad for support.

“Firms will welcome the positive signals of intent from the Chancellor and will now be looking ahead to the Budget to see whether the government can match its ambition with decisive action to cut business costs and give firms the headroom they need to invest.

”However, free-market policy advocates warned that state-directed capital allocation risks stifling the commercial sector, cautioning against any further taxation in the forthcoming fiscal statement.

Lord Hannan, Director General of the Institute of Economic Affairs (IEA), argued that sustainable recovery requires deregulation and spending restraint: “The Chancellor is right about two things. Britain needs more wealth creation and the cost of welfare needs to come down. But identifying the problem is the easy part. Britain will not become richer by having the state direct more investment.

“If John Healey genuinely wants businesses to invest, grow and make profits, he should remove the obstacles government puts in their way - high taxes, expensive energy, planning restrictions and excessive regulation.

“Above all, he cannot talk about wealth creation while leaving the door open to yet more tax rises. The test of next month’s Budget is whether he is prepared to control spending and remove barriers to growth, rather than once again asking taxpayers to pick up the bill.”