SIR Stuart Rose yesterday said the next government should cut public spending sooner rather than later, in comments that appeared to back Tory plans.
And the executive chairman of Marks & Spencer said consumers were well-prepared for a period of fiscal tightening to reduce the UK’s yawning £178bn budget deficit.
“Our customers, Tesco’s customers, Sainsbury’s customers – they’re not stupid. They know that the UK economy is in a difficult situation, they know effectively we are over-borrowed and they know there is medicine to be taken,” he said.
“I am an advocate of having that medicine earlier and more regularly, because we know if we don’t take the medicine now, the medicine will be more painful for us to take later.”
His comments followed a warning from rating agency Fitch, which said Britain’s AAA credit rating was under pressure because the government’s plans to cut the deficit were “too slow”.
Brian Coulton, head of global economics at Fitch, said: “The target of halving the deficit over four years is frankly too slow, it’s a pedestrian pace of fiscal consolidation. If we don’t get an improvement in the medium-term outlook, there will be cause for concern.”
He said the UK’s credit profile was still “within the tolerances of an AAA rating” but that it had “deteriorated pretty sharply”.
Chancellor Alistair Darling plans to reduce Britain’s deficit to below 4.4 per cent of GDP by 2015, compared to the current shortfall of 12 per cent.
But Coulton said the plan was too timid, and that the government should cut the deficit to three per cent of GDP in the same time frame.
The Tories seized on the comments from Rose and Fitch, saying they supported their plans to start public spending cuts immediately after an election. Labour has said it would wait until 2011.
Shadow chancellor George Osborne said: “Here is the clearest possible warning from a credit rating agency that the government’s plan is not enough to protect Britain’s credit rating. The red light is flashing over the British economy.”
But a spokesman for the Treasury said: “The government has set out a plan to halve the deficit over 4 years. Backed by the force of law, this is the sharpest deficit reduction in the G7 over that time.”