The CBI has published its submission to the Treasury ahead of the Spending Review next month.
And the business group wants infrastructure investment levels to be returned to 2.25% of GDP with more savings coming from welfare spending and public sector pay.
John Cridland, CBI Deputy Director-General, said: “The Government rightly decided to limit public spending. The alternative would have been tax rises and other consequences that would have damaged the economy for years to come.
“Cutting spending means tough choices. We think that the need for economic growth, not the noise of the loudest voice, should determine where cuts are made.
“The Government must improve the efficiency of public services and focus the limited public money available on areas that do most to galvanise growth.”
The CBI is calling for:
Public sector capital investment to be returned to 2.25% of GDP as soon as possible
Existing transport assets to be maintained
Work on Crossrail and upgrades to the London Underground network to continue
Savings on existing transport spending, including reducing the concessionary fares budget and the number of Highways Agency contracts
All public sector transport projects to undergo more rigorous value for money assessments
Action to attract more private sector funding for transport. For example, by increasing the contribution of direct user payments and tax increment funding.
Ian McCafferty, CBI Chief Economic Adviser, said: “Given the very high returns that new infrastructure offers, the planned cuts to net public sector investment are a concern.
“The efficiency of government must be improved across the board.”
The CBI submission highlights two main areas for action in the Spending Review: increasing competition to assist in driving down costs, and getting the public sector on to a sustainable footing by tackling unfunded liabilities, such as public sector pensions.
It adds: “To protect investment, it will also be necessary to ensure that welfare spending is more carefully targeted at those who need it, via more means testing and other measures.”