CBI warns on tax cuts ahead of election

NIC CICUTTI

Adair Turner, director-general of the Confederation of British Industry, yesterday warned the Chancellor, Kenneth Clarke, not to plump for a pre- election tax-cutting Budget, claiming that the economy did not need one, anyway.

Mr Turner said that even if the Chancellor were tempted to introduce tax cuts, public borrowing levels were unlikely to allow scope for any significant move in that direction.

"Consumer expenditure has grown by 2.5 per cent over the last year, sales of household goods are picking up, and the housing market is beginning to stir," he told the CBI's South-east region annual dinner.

He added: "We expect further acceleration, with robust consumer spending growth next year, even without any tax cuts. The facts are that public borrowing has not come down at anything like the pace envisaged, and remains high after four years of growth."

He said that the budget deficit was still high, and reduction must be a priority. "Stability and continuity must be the watchwords. Whatever the temptations of a pre-election year, we will be urging the Chancellor to stick to his belief that good economics is good politics."

Mr Turner's comments came as the Office for National Statistics yesterday released figures showing that the UK's global trade deficit in April was higher than expected at pounds 1.322bn, and a 73 per cent increase over the pounds 765m gap recorded in March. Excluding erratic items, the deficit widened to pounds 1.336bn from pounds 1.132bn.

The "mad cow" crisis, which has blocked British beef exports to Europe, was partly responsible for the Britain's exports to EU countries dropping 2.5 per cent in April to pounds 7.83bn.

However, total UK exports in April rose to pounds 13.85bn, a 0.3 per cent increase on the previous month. The improvement in the exports was even more significant in relation to non-EU countries, rising 4 per cent to pounds 6.016bn.

The trade figures released yesterday exclude so-called "invisible earnings" from services, interest earnings and dividends.

Alex Garrard, an economist at Swiss banking group UBS, said: "The rising domestic demand has resulted in a pick-up in imports and this trend is going to continue for the foreseeable future. Weak European markets will mean that the UK manufacturing sector will find it hard to expand in the near-term," he said.

Mr Garrard added that the EU component of the deficit could be the cause of "some concern" towards the year-end.

The trade deficit with EU countries reached pounds 527m, the highest since October last year, in part reflecting the economic slowdown taking place on the Continent.

The shortfall with countries outside the EU also widened to pounds 834m.

In the three months to April, total exports rose 3.1 per cent compared with the previous six months, while imports were up 3.8 per cent in the same period.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003