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Tough task ahead

THE North East Chamber of Commerce (NECC) yesterday said Chancellor George Osborne had a difficult task in reducing the deficit without choking the economic recovery after new UK growth forecasts were unveiled.

The office for Budget Responsibility yesterday predicted the UK economy will expand at 2.6% - markedly down from the previous estimate of 3.25%.

Ross Smith, NECC head of policy, said: “This makes the Chancellor’s job all the more harder for next week’s Budget. On the one hand, he has weaker expected tax returns to play with when it comes to cutting the deficit which makes public sector spending reductions more likely.

“However, on the other hand it demonstrates the fragility of the recovery and requires him to be more careful to not undermine the upturn. This is particularly important in the North East where the public sector plays a greater role in the local economy.”

Meanwhile, the CBI said the report would inject a welcome dose of credibility and transparency into the fiscal and economic growth projections.

Regional director Sarah Green said: “The forecasts for economic growth and the deficit are now in line with our own, and confirm the view that the recovery will be slow and protracted.

“The OBR’s data suggest the underlying public finance position is worse than previously thought. The bigger structural deficit will require tougher action by the Government to balance the books at next week’s Emergency Budget. “We believe this should be achieved through radical public service reform and spending restraint, rather than tax rises which would hurt businesses and consumers.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .