Budget 2009: Chancellor urged to play it safe

Monday 20th April 2009

A "slow and fragile" recovery in the UK economy is possible if the chancellor avoids major recovery programmes in this week's Budget.

That is the assessment of the Confederation of British Industry (CBI), which today warned the UK recession deepened further than expected in the first three months of this year.

But the CBI said the start of 2009 represented the worst of quarterly falls the economy would feel, with growth of 0.2 per cent forecast in the second quarter of next year.

"The UK economy remains deeply troubled, and the first quarter of this year has been tougher than expected," said Richard Lambert, CBI director-general.

"Firms have been running down their stocks of completed goods, and that is having a real impact on output, jobs and investment. Anxious consumers are spending less and building a savings buffer."

Following on from warnings from Bank of England governor Mervyn King against a fiscal stimulus, which he said the country could not afford, Mr Lambert wants Alistair Darling to focus on keeping people in work instead.

"Given falling tax revenues, the shrinking economy, and alarming levels of government debt, we urge the chancellor to avoid any further major fiscal boosts in the Budget," he said.

"Budget measures should be targeted on jobs and investment, with a focus on efficiency savings and public service reform."

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