Businesses welcome pledge to deal with budget deficit

Business groups have backed moves to deal with the UK budget deficit, ahead of the new Government's 22 June 'emergency Budget'.

Chancellor George Osborne announced the date of his first Budget yesterday, while warning that the deficit is the largest it has ever been in peacetime. He blasted "13 years of fiscal irresponsibility" under the previous Government, adding that the current situation "poses a very real threat to the recovery".

Pointing to the coalition Government's belief that deficit-reduction and a commitment to stimulating economic recovery is "the most urgent issue facing Britain", the chancellor added "we need to get moving".

And the emergency Budget must deliver a strong outline for how the new Government is to tackle the UK's budget deficit, according to the Federation of Small Businesses (FSB).

Pointing to a poll of more than 1,300 members, FSB National Chairman John Walker said that a "clear spending review" was "an issue of concern to many small business owners".

"Small firms are keen to see how the Government will tackle the deficit while also ensuring businesses can grow, further strengthening economic recovery," he added.

However, highlighting "underlying issues between the banks and small businesses and access to finance and credit", Walker also urged the Government not to saddle small firms with any new taxes.

Savings

While the chancellor gave no details as to where savings would be made, he announced the creation of an Office of Budget Responsibility (OBR) - an independent body whose stated aim is to offer an assessment of the nation's finances, while restoring confidence in economic forecasting.

The move was welcomed by the Confederation of British Industry (CBI). Deputy director-general John Cridland said: "An independent authority will help inject additional credibility and transparency into the forecast, and is something [for which] the CBI has been calling for some time.

"Because of the risks to the economic outlook that remain, it would be useful for the OBR to present a range of forecasts based on different scenarios so that risks are fully explored and prepared for.

"Given the probability that the Government's economic forecasts will be downgraded, pushing up borrowing totals, a credible fiscal plan supported by a tough line on public spending will be even more important."

The news comes as Prime Minister David Cameron welcomed new MPs in his opening speech, promising that "this is a new era for our politics and something of a new start".

Overruled

Meanwhile, the new chief secretary to the Treasury, Liberal Democrat MP David Laws, has criticised the previous Government's spending decisions.

Mr Laws told the BBC's Newsnight programme that the Government had at times overruled the advice of civil servants in its final few months of power.

"We are very concerned indeed that over the last few months of this Government there were a lot of spending commitments that were made, and some of those may not represent good value for money," he said.

He said that he was going to "freeze all of the announcements" that had been made since start of the year - amounting to "hundreds of individual decisions" - and look individually at all of those that required Treasury authorisation.

However, he admitted that a "relatively small number" appeared to have been made against the advice of civil servant accounting officers, while making clear that he had no evidence to suggest that the incumbent chancellor or prime minister had been involved.

Earlier this week, it emerged that Mr Laws' predecessor, Liam Byrne, had left a curt note for his successor, simply stating: "I'm afraid to tell you there's no money left".

IMAGE: Andrew Winning/PA Wire/Press Association Images

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