CBI alarmist over UK doing a Greece

The CBI basically wants public spending cuts and workers pay and pensions curtailed rather than taxes on the wealthy. "An earlier date for budget balance should be achieved through lower overall spending and public service reform, rather than resorting to damaging tax rises," the CBI says.

The CBI also wants the government to reverse the planned rise in employers' National Insurance Contributions, which, it says, amounts to a tax on jobs.

Budget proposals

Lambert said: "This Budget comes at a pivotal moment for the UK economy. Investors are clearly jittery about sovereign debt, but are prepared to give the UK the benefit of the doubt until after the election."

He then undermines his own scaremongering by saying: "The UK's deficit, though worryingly large, is still manageable." And that is the real key.

There is nothing wrong with lobbying for public sector restraint as an alternative (or alongside) tax rises. There is certainly a good argument that NIC rises do tax jobs. But to pretend the UK will go bust otherwise is disingenuous.

"The Government must act now to set out a convincing, credible pathway for balancing the books. It is critical that this Budget provides credibility and direction on the public finances, and creates the right conditions for businesses to drive economic growth," Lambert said.

The CBI's proposals include:

• The Budget to be balanced by 2015-16, two years earlier than currently planned, to instill market confidence in the UK's public finances.
• A more detailed plan for public spending with a lower trajectory for overall spending. This should focus on public sector current spending cuts, rather than tax increases or cuts to capital spending.
• Public sector productivity to be raised by re-engineering the way public services are delivered and inefficiencies in supply chains, procurement and workforce management to be addressed. Spending public money more smartly could generate savings of more than £130bn by 2015-16.

Lambert said: "The Budget should do whatever is necessary and possible to maintain and strengthen this country's reputation as an attractive place for investment. The planned rise in National Insurance Contributions is particularly ill-judged. It is a direct tax on jobs and should be reversed."

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