Pro­tect­ing bud­gets ‘dam­ages re­cov­ery’

The Peterborough Evening Telegraph - - EtBusiness Daily - By JOHN KRALEVICH john.kralevich@pe­ter­bor­oughto­

RING-FENC­ING health and over­seas aid bud­gets is un­jus­ti­fi­able, and poses se­ri­ous risks to the UK’s eco­nomic re­cov­ery and fu­ture growth.

That’s ac­cord­ing to Peter­bor­ough Cham­ber of Com­merce, whose chief ex­ec­u­tive, John Bridge, claims that by pro­tect­ing cer­tain bud­gets and pro­grammes with­out clear jus­ti­fi­ca­tion, it will force more dras­tic cuts to cap­i­tal in­vest­ment, which is es­sen­tial to un­der­pin Bri­tain’s long-term eco­nomic re­cov­ery.

Mr Bridge also warned that pun­ish­ing new taxes that neg­a­tively af­fected pri­vate sec­tor growth must also be avoided to en­sure that short-term rev­enue gains would not be out­weighed by longer-term neg­a­tive eco­nomic con­se­quences.

The warn­ings come less than a week be­fore Chan­cel­lor Ge­orge Os­borne is due to de­liver his emer­gency bud­get, within which he is widely ex­pected to con­firm sig­nif­i­cant cuts to cap­i­tal in­vest­ment plans.

Mr Bridge said: “The Chan­cel­lor faces an un­en­vi­able task next week, but it is es­sen­tial in our eyes that he fo­cuses on putting busi­ness growth at the very heart of govern­ment pol­icy.

“Our great­est fear is that short-term tax in­creases and cuts to in­fra­struc­ture spend­ing will dam­age busi­ness con­fi­dence and de­lay eco­nomic re­cov­ery, hin­der­ing job cre­ation and dis­cour­ag­ing busi­ness in­vest­ment.

“While we do not en­dorse spend­ing your way out of a re­ces­sion, in­dis­crim­i­nately slash­ing in­vest­ment in in­fra­struc­ture will have a cat­a­strophic ef­fect on the pri­vate sec­tor’s abil­ity to drive the econ­omy for­ward.

“The de­ci­sion to ring-fence spend­ing on health and over­seas aid is less than sen­si­ble, and un­sus­tain­able in the cur­rent cir­cum­stances, un­avoid­ably re­sult­ing in deeper and more dras­tic cuts to im­por­tant in­vest­ment else­where.

“Here, in the East of Eng­land, busi­ness is re­ly­ing on a sen­si­ble and co-or­di­nated, strate­gic ap­proach to in­vest­ment that will en­able the re­gion to re­main one of the three most pro­duc­tive ar­eas in UK.

“In par­tic­u­lar, the re­newal of trans­port in­fra­struc­ture must con­tinue, even in the face of the tough­est pub­lic spend­ing cli­mate in decades.

Mr Bridge added: “Our mem­bers would like to see the Chan­cel­lor turn his at­ten­tion to the pub­lic sec­tor wage bill, which is ut­terly out of touch with the real world, and com­mit to the ur­gent re­forms needed to rein in the huge costs of pub­lic sec­tor pen­sions.

“The Govern­ment must avoid pun­ish­ing new taxes that neg­a­tively af­fect pri­vate sec­tor growth.

“Short-term rev­enue gains would be out­weighed by longert­erm eco­nomic con­se­quences, from re­duced busi­ness in­vest­ment to lower rates of job cre­ation.

“If tax rises are un­avoid­able, they should be tar­geted at con­sump­tion taxes rather than pay­roll, in­come or prof­its.”

warn­ing: Cham­ber chief ex­ec­u­tive John Bridge.

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