Business leaders have urged George Osborne to “hold his nerve” on reducing the deficit in the public finances in this week’s Autumn Statement, even as the Chancellor himself hints that his plans for a budget surplus may need to be scaled back, reports The Telegraph.
The two largest business lobby groups have urged the Chancellor to stick to his plans despite new figures on Friday which showed the Government’s widest October deficit in six years.
A poll by the Institute of Directors shows that 85pc of its members support the Chancellor’s pledge to produce a £10bn surplus by 2020, and the organisation accepted that this goal could require cuts to programmes set up to support businesses.
“The Chancellor is under immense pressure to loosen the purse strings, but he must hold his nerve. If he is going to fulfil his ambition to build a ‘low tax, high wage’ economy he cannot compromise on his plans to eliminate the deficit and start paying down Britain’s mountain of debt,” said Simon Walker, director general of the IoD.
Carolyn Fairbairn, the new director general of the Confederation of British Industry, told The Telegraph that the business group backs the Chancellor’s spending cuts, providing he continues to fund long-term growth drivers such as research and infrastructure. “The job is not done in terms of getting public finances under control,” she said. “We’re supportive of that and it’s going to require tough choices.”
Mr Osborne has said that the post-election spending review is now settled with all government departments, with the negotiations going “more smoothly than the previous two spending reviews I’ve conducted”.
Details of where the cuts will fall will be revealed with the Autumn Statement on Wednesday, alongside the latest Office for Budget Responsibility forecasts on the public finances.
Mr Osborne has refused to deny that his goal to end two decades of budget deficits with a £10bn surplus by 2020 was sliding out of reach, amid increased spending on counter-terrorism and the NHS, as well as roadblocks in the House of Lords for his £4.4bn welfare cut.
“I would make this observation: there’s nothing painful about a surplus. The pain comes if you borrow forever,” he told the BBC’s Andrew Marr Show.
“If after a decade of economic growth, Britain is still running a deficit… if you’re not putting aside money for a rainy day, you’re basically repeating the all the mistakes that got Britain into this mess a decade ago.”
The Office for Budget Responsibility has already cut the chances of the Government meeting its commitment to balance the books by 2020, lowering the chances from 65pc to 55pc after the post-election Budget.
The Institute for Fiscal Studies has estimated that Whitehall departments without spending protection will face cuts of 27pc in this week’s review. The budget reductions expected between 2010 and 2020 are the steepest since the Second World War, the IFS said.
Meanwhile, the public appears divided about the optimum pace of spending cuts. A poll of 2,000 people by PwC found that only 51pc believe that balancing the books within five years is important.
