Credible plan needed to cut our record deficit says CBI leader

Richard Lambert said he was “certainly not satisfied” with the plans set out by Chancellor Alistair Darling in last month’s Pre-Budget Report, which he said had put off much of the “heavy lifting” needed to bring the 178 billion deficit down until the Parliament after next – five years or more away.

Promised legislation committing the Government to halving the deficit within four years was no substitute for plans spelling out how to fix the “big structural problems” in the public finances, he said.

In an upbeat look ahead at Britain’s prospects for 2010, Mr Lambert said all economists expected national income to grow in the year to come. The economy would benefit from a more stable banking and business environment and trade would be boosted by the low value of sterling, while the pain from dealing with the deficit was unlikely to be felt until 2011.

Despite Conservative claims that they would rein in borrowing more swiftly than the Labour Government, Mr Lambert said it was “highly unlikely” the squeeze would start before the second half of next year whichever party won the election which must take place by June 3.

He told BBC Radio 4’s Today programme: “The Government is clear that it takes the view that the economy is pretty fragile now – and it’s right, it is very fragile – and that slamming on the brakes now could send us back into the spin and therefore they shouldn’t be putting a squeeze on until the second half of 2011.

“Even if there is an election and the government changes hands, not much will happen before then anyway. That’s not likely to happen this year.

“That is one reason why there is such a terrific amount of uncertainty about the economy going forward – the Bank of England keeps an index of uncertainty about the economic outlook and it’s as high as it’s been for 10 years.”