LABOUR must use the coming Budget to set out its spending plans in much greater detail to boost economic stability and confidence in the public finances, the Confederation for British Industry (CBI) will say today.
In a letter sent last week to the chancellor Alistair Darling, the director general of the CBI Richard Lambert called for the government to boost the UK’s fiscal credibility and foster economic growth.
He added: “It is critical that this Budget provides credibility and direction on the public finances and creates the right conditions for businesses to drive growth.”
The date of the Budget has not yet been confirmed but 24 March is currently the most likely day.
The CBI has urged the government to balance the Budget by 2015-16, two years earlier than planned but cautions that fiscal tightening should not begin until 2012 to ensure that the recovery remains on track.
The additional tightening should be focused on current spending, said the CBI’s chief economic adviser Ian McCafferty, who added that the government can be far more ambitious about efficiency savings than it has been so far.
Concern about the state of Britain’s public finances have been gathering momentum in recent weeks as the prospect of a hung parliament looms ever larger.
Lambert said: “Businesses and the markets are very anxious about the idea of a hung parliament but there is a broad consensus among the main parties. We would more than muddle through.”
However, some City economists have highlighted the difficulties that a minority government could face in passing the necessary legislation, with Labour unwilling to cut public spending to maintain good relations with the trade unions.