Job creation for IT contractors and other workers will be an essential factor in the recovery of the economy, it has been claimed.

Going hand-in-hand with this should be an immediate two-year freeze in public sector pay and heavy reform of the way public services are delivered, according to the Confederation of British Industry (CBI).

As the much-lauded economic growth of the past decade was driven by unsustainable financial sector expansion and heavy government spending, conditions must now be set to allow private business to drive the economy forward, the CBI claims.

In a new report, the CBI offers some basic ideas for cutting the cost of public services, with a two-year pay and recruitment freeze saving some £18 billion.

"Experience suggests that the best way of bringing down a substantial deficit without damaging growth is through spending restraint rather than raising taxes," explained CBI director-general Robert Lambert.

The Recruitment & Employment Confederation also insisted earlier this week that though a strategic approach to public sector reform, savings could be made without making severe, damaging job cuts.