Crucial that businesses can thrive

Jun 16 2010 by James Ramsbotham, The Journal

EXPECTATIONS regarding the outcome of a budget have almost certainly never been lower than they are for George Osborne's emergency statement next week.

The coalition Government could hardly have done more to prepare the country for a sobering mix of spending cuts and tax rises.

Some will arrive on Tuesday when Mr Osborne makes the second budget statement of 2010. Others will have to wait for the spending review when it concludes in the autumn.

The need to address the deficit is broadly recognised. However, it’s far easier to sign up to this principle when it’s purely about numbers and percentages. Once the specifics become clear, the battles will really begin.

And like every other organisation in the country, NECC has its own views on what should and should not be part of the deficit reduction plan – and where we are ready to battle in the interests of North East business.

They include the need to avoid taxes which will make job creation more difficult – specifically by cancelling the proposed rise in employers’ National Insurance contributions. Reforms to tax must also avoid hampering investment.

Investment in strategic infrastructure must be prioritised over current spending. Savings through public procurement cannot be allowed to damage regional economies. And support for firms to invest in training remains crucial.

Fundamentally, every line in both the budget and spending review should be made to pass an economic recovery test – demonstrating that decisions will not put the fragile growth we are experiencing at risk.

And all decisions should be robustly assessed for any perverse implications in different regions – such as reforms to aviation taxes.

The bottom line is that the public sector will not be expanding and will not be increasing employment levels in the near future. The only way to achieve growth and more jobs in the North East, along with the tax revenues to pay for public services, is to enable our businesses to thrive.

The Chancellor inevitably will be announcing bad news for many people on Tuesday. But if it’s bad news for North East businesses, it’s bad news for all of us.

:: James Ramsbotham is chief executive of the North East Chamber of Commerce