Ahead of the Chancellor’s Pre-Budget Report on Wednesday, the British Chambers of Commerce (BCC) has called for cuts across the board in public services, pay and pensions.
In his report, Chancellor Darling is expected give more details of how over four years he plans to halve the massive state deficit he has built up.
Delivering its latest economic forecast, the British Chambers of Commerce made downward revisions to its GDP expectations for 2009 and 2010.
It said: ‘Public debt is set to increase to dangerous levels, in excess of 90 per cent of GDP.
‘This debt can only be reduced through fiscal tightening, such as spending cuts and tax increases.’
It predicted ‘a large decline in UK GDP of 4.6 per cent in 2009’.
BCC Director General David Frost said, ‘It’s vital that the Chancellor’s PBR avoids new business taxes, higher National Insurance contributions.’
He added: ‘Given the perilous state of the public finances, we cannot afford any sacred cows when it comes to making spending cuts – no matter how politically desirable it may be.
‘Reform of the public sector must be the cornerstone of a credible plan to reduce spending.
‘Freezing public sector pay and reforming pensions must be part of that plan, and action in these areas should start now.’
BCC Chief Economist, David Kern, warned: ‘Trying to cut the fiscal deficit significantly before the economy starts growing at a more normal pace would be a mistake that could unleash a new recession.
‘Nevertheless, it is increasingly urgent to present a credible plan for curbing the deficit.’
Appearing on the BBC’s Andrew Marr Show yesterday, Chancellor Darling refused to indicate what might be in the report, except to say that the national NHS IT system would not go ahead at this moment.
Meanwhile, TUC General Secretary Brendan Barber called on Labour to tax the rich.
He said: ‘The best way to tackle the deficit is to get the economy growing again, but there will still be a need to take further action.
‘Too many say the next government will have to make big cuts in vital services or make ordinary people pay more tax.
‘But there is an alternative and that is to ask those who did so well out of the boom to start paying a fairer share of tax.’