The Chancellor must ensure the forthcoming Budget contains a sustainable economic plan to reduce debt rather than simply including voter-friendly policies ahead of the election, EEF has warned.
Alistair Darling is due to give his Budget address on March 24 with the general election likely to be held on May 6.
Publishing its Budget submission, the manufacturing organisation expressed concern over the potential harm to the UK’s recovery from a poorly devised plan to repair public finances. Government’s priority, EEF stressed, should be inducing stability in the tax system and in the business environment.
Steve Radley, director of policy at EEF, said: “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.”
EEF believes the debate on the timing of deficit reduction is diverting the attention from the most important issue: how finances will be improved. To achieve this goal, EEF says it will be necessary to raise taxes or cut spending to save £10-15bn annually for the duration of the next parliament.
Radley continued: “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.”
With its 6,000 members collectively employing around 900,000 workers, EEF is considered one of the leading representative voices of UK manufacturing.