The Chancellor’s warning today of a “cocktail of new threats” facing the UK economy reinforces the importance of reducing the government’s budget deficit, the Institute of Directors has said.
James Sproule, Chief Economist at the IoD said:
“Osborne’s warning comes at an important time for the world – and British – economy. With turmoil on the stock markets, interest rates still at extraordinary lows, and various surveys painting a less than rosy – albeit more realistic – outlook for the developing world, the UK must be prepared for all eventualities. First and foremost, that means a continued focus on eradicating the deficit.
“85% of IoD members support the Chancellor’s plans to run a small budget surplus by the end of this parliament. They know that without bringing public spending under control, the UK’s debt pile will continue to grow. That means when – not if – the next crisis strikes, it is unclear how well we will be able to weather the storm.
“The IoD warned last year that the Chancellor did not leave himself much room for manoeuvre by relying on a £27 billion accounting windfall in the Autumn Statement to balance the books. Now those concerns have come into sharper relief.
“Without a concerted effort to bring ever rising public spending under control, tax hikes like the apprenticeship levy will always be tempting, and the promised increase in income tax thresholds and cuts to corporation tax may not materialise. The fact the sun seems to be shining a little dimmer highlights the importance of fixing the roof sooner rather than later.”