Until now the CBI has cautiously supported the Government’s spending policy, but now it has called for a construction stimulus package to prevent the economy tumbling back into recession.

CBI Director-General, John Cridland, told business leader that boosting activity in the housing market and construction would be a major “game-changer” for growth.

Cridland said: “I want to see the Chancellor use his autumn statement on 29 November to jump-start the housing market.”

He told the CBI annual dinner: “Bolstering infrastructure spending investment on transport, power stations and housing is one of the biggest and most effective levers the Government has to pull.

“It will help unlock some of the £60bn of potential investment currently on company balance sheets and could create new jobs into the bargain.”

Cridland said the Government must do much more to stimulate house building.

“A determined attack on the major blockers of finance and planning, could transform the outlook of a generation of young people and provide a huge fillip to consumer and business confidence.

“Now is the time to stop the stagnation and get the housing market flowing again.”

The CBI wants to see a revitalised Mortgage Indemnity Guarantee, to reduce the risk of higher loan to value mortgages.

Cridland said: “One way this could be done would be through a deal between mortgage providers and house builders. There could also be a role for government to step in with some very focused support to bridge the gap.

“Another way of helping first-time buyers to access finance to get on the property ladder could be to allow them to access locked savings in their personal pension pots through a loan-back scheme.

“Members of company schemes could borrow money from their own pension pot at a low cost, paying the loan back through their salary at any time during their working life.”