Responding to the Chancellor’s Budget today, Director General of the British Chambers of Commerce (BCC), David Frost, said:
“The Chancellor appears to have understood that it will be business driving the economy out of recession, and there are some good measures that reflect this.
“A major concern has been raised over the income tax hike for the highest earners. The strength of the UK has been as a low tax economy giving us a competitive advantage and able to attract the most highly skilled workers.
“The top tax rate in France and Germany is 40% and 45% respectively, giving us the highest top rate of our major European competitors. “If the government was serious about the UK remaining a global player they would not be throwing away such an important advantage for a relatively small return.”
Commenting on the main macro-economic points in today's Budget speech, David Kern, Chief Economist at the BCC, said:
"The Chancellor's Budget rightly acknowledges that the official GDP forecasts in the November PBR were far too optimistic. The recession is clearly much deeper than previously envisaged. The new GDP growth forecast, of –3.5% in 2009, is realistic.
“But, his expectation of 1.25% economic growth in 2010 is too optimistic, even if growth resumes towards the end of the year. More significantly, his assumptions of very rapid growth for a number of years from 2011 onwards are unrealistic.
"The outlook for unemployment is bleak, and we still expect a peak of some 3.2 million next year. It is doubtful if the measures announced today, however welcome, will alleviate significantly the jobless situation.
“If the Chancellor's growth forecasts prove indeed to be too optimistic, there will be adverse consequences for the credibility of his forecasts for the public finances. “The official forecast that Government borrowing will be £175 billion this year, some 12.4% of GDP is realistic. However, the official forecast that the Budget deficit is set to halve in the next four years is based on over-optimistic growth assumptions.
"The Chancellor will have to do more to persuade the markets that the health of our public finances will be restored."