Budget must convince on public finances, urges CBI

THE CBI is urging the Government to use its last Budget before the election to set out more details of spending plans to boost confidence in the UK’s public finances and provide economic stability.

In a letter to Chancellor Alistair Darling, the CBI’s director-general Richard Lambert pointed out that boosting the UK’s fiscal credibility and fostering economic growth were the two critical objectives for the Budget.

The CBI says that delivering a detailed and credible plan for balancing the books by 2015-16 – two years earlier than planned – is the key to addressing concerns about the UK’s public finances and its AAA debt rating.

An earlier date for budget balance should be achieved through a combination of lower overall spending and public service reform rather than resorting to damaging tax rises at a time when the economy is still fragile, the CBI says.

The business group is also pushing for the Budget to include measures to nurture economic growth by supporting businesses and entrepreneurs, including reversing the planned rise in employers’ National Insurance contributions.

Mr Lambert said: “This Budget comes at a pivotal moment for the UK economy. Investors are clearly jittery about sovereign debt but are prepared to give the UK the benefit of the doubt until after the election.

“The UK’s deficit, though worryingly large, is still manageable but the government must act now to set out a convincing, credible pathway for balancing the books. It is critical that this Budget provides credibility and direction on the public finances and creates the right conditions for businesses to drive economic growth.”