Osborne urged to pull out stops for business Budget

Business leaders threw down the gauntlet to the Chancellor, George Osborne, last night with demands for an aggressively pro-business Budget to kick-start the economy's fragile recovery.

The call from the British Chambers of Commerce came as it slashed its growth forecasts for 2012 to an anaemic 0.6 per cent, although it believes the UK should narrowly avoid a double-dip recession.

The BCC's director-general, John Longworth, said: "Our economic forecast underlines the need for the Government to deliver a Budget that will bring confidence to businesses. The chancellor must pull out the stops to enable British businesses to drive growth here at home."

There is some positive news from Britain's biggest retailer, Tesco, which is announcing today that it is creating 20,000 new jobs after poor UK sales.

But the BCC warned that the wider economic outlook remained tough. It is calling for the swingeing 5.6 per cent business rates rise due in April to be scrapped, a speeded-up planning system, and more encouragement for private investors to pump funds into infrastructure projects. It also urged the Treasury to put in place credit-easing plans to help cash-starved businesses, and to consider the creation of an SME bank to improve lending to small firms.

Rachel Reeves, Labour's shadow treasury secretary, seized on the BCC's survey. "George Osborne needs to realise his economic gamble of tax rises and spending cuts that go too far and too fast has backfired," she said. "Businesses are right to want urgent action." But Mr Osborne still has scant room for manoeuvre in his Budget on 21 March. The ratings agency Moody's has heaped pressure on him to cut the deficit, putting the UK's AAA rating on negative outlook.

The economy has shown some signs of life this year with improved high street sales and evidence of recovery among services and manufacturing. But homeowners received a blow at the weekend when Halifax and Royal Bank of Scotland increased their standard variable mortgage rates.