Britain urged to balance budget

British Finance Minister Alistair Darling should balance the public finances sooner than planned but is right to avoid big cuts this year to protect the fragile recovery, the Confederation of British Industry said.

The nation's budget deficit, set to come in at over 12 per cent of gross domestic product, has become a battleground for political parties, due to fight an election by June, and stirred worries that Britain could lose its triple-A credit rating.

The opposition Conservatives have said they would take radical action to curb spending soon after winning power, while the Labour government has ruled out immediate cuts, which it fears could tip the economy back into recession.

The CBI reckons the government should hold off making any dramatic spending cuts until next year.

"The economy is in a very fragile state and it's a finely balanced judgement, but the process should get seriously underway in 2011," said CBI Director-General Richard Lambert.

"The degree of fiscal tightening we'll need is more challenging than other G7 countries. But one real advantage is that the maturity of government debt is longer than other countries, and we're confident the UK's credit rating is sustainable," he added.

Britain emerged from an 18-month recession at the end of last year, but recovery is likely to be slowed by tight credit.


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