David Frost, director-general of the British Chamber of Commerce, called for a new strategy to support growth.

‘Radical action’ needed in Budget

‘Radical action’ needed in Budget

By Hannah Brenton

Next week’s Budget must see “radical polices” to promote economic growth, the head of one of Britain’s most respected business groups has said.

With less than a week to go before the Budget, thinktanks and business groups are calling for provisions to promote growth after a number of organisations downgraded their forecasts for the UK economy this year.

Writing for politics.co.uk, David Frost, director-general of the British Chamber of Commerce (BCC), called for a new strategy to support growth.

Comment: The Budget must match rhetoric on growth with radical action

“The government’s rhetoric on growth has not yet been matched with real action to deliver a strong environment for the private sector to flourish,” Mr Frost said.

“Businesses are not seeking handouts, but need the government to create the climate in which they can grow.”

Mr Frost outlined three areas where the Budget could improve business prospects: limiting red tape, boosting exports and increasing finance available to small businesses.

The director-general argued Britain could find itself facing a jobless recovery if employers were not encouraged to hire more.

He said employers were being “strangled by red tape”, with new legislation set to come in later this year.

“We want to see all new employment legislation delayed or scrapped and a moratorium on additional employment regulation introduced for the remainder of this parliament,” Mr Frost said.

He urged the government to take strong action on exports and promote trade.

“Many firms say they do not export because they can’t break into new markets or access the trade finance they need,” the business leader said.

“We believe that a stronger UK export credit agency and better trade promotion would be a step in the right direction to correcting these problems.”

And he called for tough action on bank lending to small businesses.

“If 2011 is to be a year for growth, the government must help companies to invest in people, premises and new ideas. Beyond lending targets, banks must be transparent with clear lending processes, and offer local, professional support to businesses,” Mr Frost argued.

“A Budget for growth will be judged by whether it boosts business confidence, encourages investment and rekindles the spirit of enterprise.”

Chancellor George Osborne yesterday signalled the Budget would re-focus the government’s economic policy. He told the OECD it would signal a move “from rescue to reform” and promote a new model of economic growth.

Business leaders have been calling for a renewed focus on growth since January, when Richard Lambert, then-head of the Confederation of British Industry (CBI), used his final speech as director general to call on the government to create a “vision” for the direction of the economy.

Left-leaning thinktank IPPR have called on the chancellor to adopt their economic ‘plan B’ in the Budget.

IPPR created a ‘deficit reduction averaging plan’ that they say would cut the deficit at a slower rate than under government’s spending cuts but provide greater flexibility than under Labour’s plan to halve the deficit over four years.

Tony Dolphin, senior economist at IPPR, urged the chancellor to create a ‘flexible’ approach.

“There is an alternative to the Osborne and Darling deficit reduction plans. Our ‘plan B’ is based on economic pragmatism and not politically imposed deadlines. It would give the chancellor a formula for flexibility,” he said.

“Rather than setting out detailed year-by-year plans to eliminate the entire structural deficit, or to halve the actual deficit, in this parliament, our ‘plan B’ proposes annually reviewing progress and the economic outlook, so that deficit reduction is sensitive to swings in economic growth.”