There should be a massive surge in government spending to fight the effects of the economic recession, say Britain’s bosses.

In an unusual move, the Institute of Directors’ Chief Economist, Graeme Leach, said Gordon Brown should launch a huge surge in public spending.

Speaking at a meeting of the Association of Universities in the East of England at Cranfield University in Bedfordshire today (14 January), Mr Leach said there was a 50-50 chance of having a weak recession or plunging in a deep downturn of up to six percent of Gross National Product.

He said: “I think the Government needs to do more. It is rare that the Institute of Directors calls for more government spending.” However he warned that such calls were likely to prove fruitless: ”The Government has not got enough money because it has spent too much in the past.”

He urged businesses and individuals to "prepare for the worst” although he admitted economists were hopeful it would not happen.

And he went on to caution the Government that “printing money was not a free lunch” because Gordon Brown could so easily lose control of inflation.

Mr Leach predicted that the UK could be facing an L-shaped recession where the economy goes down this year but then flattens out. In the past, he said, Britain has suffered V-shaped and U-shaped recessions which have returned to positive growth.

He said it is difficult at present to see how the crisis would unfold but said a full-blown depression was unlikely. But he suggested that those companies severely hit in the last recession – in the 1990s – would be the victims again and may well go under.

The AUEE’s conference at Cranfield University in Bedfordshire is entitled ‘Your role in the road to Recovery – the Higher Education contribution’. The Association’s Chair, Professor Les Ebdon CBE said universities had the opportunity and obligation to play a crucial role for businesses and individuals delivering the skills and innovation which would turn round the recession.