EEF says �15 billion needed to repair UK public finances

Repairing the UK public finances will require tax rises or spending cuts of up to £15 billion a year, a manufacturing group warned today.

The Engineering Employers Federation urged the Chancellor not to use the Budget later this month for "eye catching" announcements on public spending as it would risk damaging business confidence. 

The EEF said it believed the current debate about the timing of deficit reduction missed the point and was deflecting attention from how fiscal adjustment could be achieved.

Its director of policy, Steve Radley, said: "At a time of economic and political uncertainty firms need stability in the tax system and business environment. Manufacturers will be looking for a credible plan on how the public finances will be repaired rather than new spending that will have to be clawed back at a later date.

"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.

"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."

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