The CBI stressed that November’s Budget should be a ‘time for prudence’, highlighted by a slight tightening to counter a forecast 4% increase in consumer spending over the next year.
A CBI spokesman said: ‘The more stringent the Chancellor is, the less he will need to rely on higher interest rates to achieve policy tightening in the future.’
Forecasters at the CBI recommended a slightly larger cut in the contingency reserve from # 5bn to # 3bn, with only part of the reduction allocated to actual spending to make way for tax cuts. Government spending plans also need to be reduced to take account of lower than expected inflation.
Concern was expressed by the CBI at the Government’s cut-back on capital spending. It demanded an immediate increase in publicly sponsored capital, with notably higher investment in the private finance initiative.
The CBI spokesman continued: ‘This package aims to remove or ameliorate some of the remaining impediments to entrepreneurship and employment.’