Monday, UK's leading business group, the Confederation of British Industry, urged Chancellor of the Exchequer to deliver a confidence-building Budget, which would support jobs, investment and competitiveness through the recession and beyond.
In a submission to Chancellor of the Exchequer Alistair Darling before the April 22 budget, the CBI also urged for a clear and credible strategy to get the public finances back under control.
The CBI warned that the alarming state of the public finances rules out the option of a further significant fiscal stimulus, which would undermine business and institutional investor confidence in the UK.
CBI Deputy-Director General John Cridland said, The public finances have been battered by the cost of rising unemployment and lower tax receipts during the recession. With economic activity expected to contract by 3.3 per cent and unemployment set to reach nearly three million this year, the outlook for the public finances is already alarming.
Against this backdrop, a further significant fiscal stimulus is unaffordable and would lead to businesses and households retrenching in fear of higher tax bills in the future. Instead, the Chancellor needs to let the considerable stimulus already in the pipeline take effect and deliver a clear and credible plan for restoring the public finances to health, Cridland added.
The CBI said it is proposing a targeted package of measures that will under-pin confidence, boost competitiveness, employment and investment, improve the skills base, and bring the public finances back on track, with minimum harm to the social and economic fabric of the UK.
The package includes delaying the planned rise in 2011 of employer National Insurance Contributions from 12.8% to 13.3% to reduce the cost of employing people and restoring empty property rates relief to its pre-2008 position.
The CBI said with firms demolishing property as they cannot afford to pay the rate, at the very least the government needs to bring in a 50% reduction, as allowed for in current legislation.
It also recommended to freeze business rates for two years to iron out the impact of peaks and troughs in RPI inflation and to introduce a temporary scrappage scheme to encourage consumers and businesses to replace old cars, vans, fridges and washing machines with the latest efficient models, which would bring forward spending and reduce carbon emissions.
Ian McCafferty, CBI Chief Economic Adviser said, There is no room for further fiscal demand stimulus. A further significant fiscal stimulus risks undermining the confidence of foreign investors in gilts as well as increasing fears about dramatic tax rises in years to come.
In its Budget submission, the CBI also called for measures to safeguard jobs, support the unemployed and improve skills. With unemployment expected to rise sharply, investing in skills and training during the recession will help business remain competitive and position the UK for recovery, the business lobby said.
CBI's proposals include, fast-tracking access and even more flexibility to the Train to Gain programme for firms of all sizes and a temporary subsidy for master's degrees courses, particularly in science, technology, engineering and mathematics to minimize unemployment among graduates and boost the UK's skills base.
It is essential we do not allow the newly-unemployed to slip into long-term unemployment, nor create a lost generation of graduates leaving college simply to swell the ranks of the jobless, Cridland said.
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