Business leaders give Osborne late boost

George Osborne buoyed by business support
George Osborne buoyed by business support

By Peter Wozniak

A letter co-signed by some of Britain's top businessmen has issued a resounding endorsement of George Osborne's spending plans - warning him against "watering down" the cuts.

The signatories of the letter published in the Telegraph include the heads of Microsoft UK, Asda, Next and Marks & Spencer.

Its publication comes two days before the full extent of the government's austerity drive becomes known.

The business leaders insisted the chancellor should press ahead with the aggressive programme of deficit reduction despite any political concerns.

"It has been suggested that the deficit reduction programme set out by George Osborne in his emergency Budget should be watered down and spread over more than one parliament. We believe that this would be a mistake," they argued.

"In the end, the result would be deeper cuts, or further tax rises, in order to pay for the extra debt interest."

The letter echoes endorsement from the IMF - which suggested the risk of the much-feared 'double dip' recession is low.

It read: "There is no reason to think that the pace of consolidation envisaged in the Budget will undermine the recovery."

The coalition is bracing itself for considerable unpopularity after the release of the spending review details on Wednesday.

Key coalition figures including David Cameron, Nick Clegg, Mr Osborne and Danny Alexander have been at Chequers over the weekend hammering out the final details.

Both governing parties are pinning their hopes on a strong private sector-led recovery to soak up job losses from the public sector.

However, a PwC report last week indicated there could be considerable knock-on effects on the private sector companies which depend upon government contracts.

The business leaders' letter dismissed such concerns, arguing: "The private sector should be more than capable of generating additional jobs to replace those lost in the public sector, and the redeployment of people to more productive activities will improve economic performance, so generating more employment opportunities."

The signatories include some likely supporters of the Conservatives, but also other names which have no overt political affiliation.

The chancellor will no doubt welcome the boost the support will give him before his announcement on Wednesday - but it is the cuts, rather than the eventual recovery, that will dominate headlines both this week and for some time.


Politics @ Lunch

Friday lunchtime. Your Inbox. It's a date.