Business leaders threw down the gauntlet to 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%, although it believes the UK should narrowly avoid a double-dip recession.
BCC 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 was 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 the wider economic outlook remains tough. It is calling for the scrapping of the swingeing 5.6% business rates rise due in April, 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 consider the creation of an SME bank to improve the flow of loans to small firms.
Rachel Reeves, Labour's Shadow Chief Secretary to the Treasury, 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. Businesses are right to want urgent action." But Mr Osborne still has scant room for manoeuvre in his Budget on March 21. Ratings agency Moody's has added to the pressure on him to cut the deficit, putting the UK on negative outlook — implying a one-in-three chance of the UK losing its prized AAA credit rating.
The economy has shown some signs of life this year with improved high street sales and evidence of recovery among services and manufacturing firms. However, homeowners received a blow at the weekend when Halifax and Royal Bank of Scotland increased the standard variable rate for mortgages.