Manufacturers warn Chancellor against new spending pledges in Budget

Publishing its Budget submission, the manufacturers' organisation EEF has urged the government to make clear its priority is to provide stability in the tax system and business environment, against the economic backdrop of a tentative recovery. The organisation believes the task of repairing the public finances cannot be underestimated and will require tax rises or spending cuts of between £10bn and £15bn per annum over the next parliament, depending on the strength of the recovery. The current debate on the timing of deficit reduction misses the point and is deflecting attention from the real issue that businesses are concerned about - how fiscal adjustment will be achieved. EEF director of policy Steve Radley, said that at a time of economic and political uncertainty firms needed stability in the tax system and business environment. "Manufacturers will be looking for a credible plan on how the public finances will be repaired rather than new spending that will have to be clawed back at a later date. "That plan must be based on a full review of the government spending priorities and on the need to ensure the UK's tax system is internationally competitive. Manufacturers are likely to keep investment plans on hold if the government fails to address these issues. "Just as important is the fact that any fiscal gains from lower than expected unemployment were mainly down to companies and employees working together to minimise job cuts and retain skills. Business will be perplexed if they end up being rewarded for this with higher taxes to fund new spending commitments rather than to reduce borrowing."