Businesses call for government action on deficit
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by business editor Trevor
Sturgess
Bosses have called on the next Government to act quickly on the
spiralling budget deficit.
The
Institute of Directors and the
CBI
both believe it is the most pressing task facing the
incoming Government after the General Election.
IoD director-general Miles Templeman, chairman of Faversham
brewery Shepherd Neame, said: "We are convinced that we need swift
action to tackle the budget deficit. This means making significant
spending cuts in 2010.
"The argument that early cuts would jeopardise the recovery is
mistaken. We believe that lower spending is likely to trigger a
whole series of positive developments that will assist growth."
The CBI says that the books should be balanced by 2015-16, two
years earlier than planned, and urges the Government to abandon
plans for a rise in National Insurance Contributions which it
claims would be a tax on jobs.
In its Business Manifesto 2010, the IoD argues that "fiscal
tightening" based on lower public spending - but not higher taxes -
would kick-start economic recovery.
It rejects the Government's argument that lower public spending
in the short term will threaten recovery, claiming that it would
"trigger a whole series of positive developments that will assist
growth."
The IoD says the implications for higher taxation are deeply
worrying and believes that a prolonged argument over whether belts
should be tightened sooner or later will reduce the chance to
restrain public spending. This, it claims, would be damaging to the
economy.
In a recent poll of 1,500 IoD members, an overwhelming 86 per
cent said that public spending should be reduced, with 72 per cent
saying the cuts should start in 2010 and 71 per cent that
addressing the deficit was the new Government's top priority.
The IoD identifies 34 areas of potential spending cuts,
including a one-year public sector pay freeze, the abolition of
child benefit for better-off families, and a 10 per cent reduction
in the size of the Civil Service.
It wants the Government to reduce spending to 35 per cent of GDP
by 2020-21 but urges more spending on roads, and a third runway at
Heathrow.
Monday, March 08 2010
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