British business leaders back plans to cut public spending

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Leaders of some of Britain's biggest businesses have thrown their weight behind the coalition government's plans to deeply cut public spending, in a letter published Monday.

The 35 company chiefs urged the Conservative-Liberal Democrat government to press ahead with their budget-slashing plans, warning that markets might "lose faith" in Britain if it failed to tackle a record deficit.

The public endorsement of the controversial plans, which critics fear may tip the country back into recession, came ahead of Wednesday's comprehensive spending review which will outline the cuts in detail.

"Everyone knows that when you have a debt problem, delaying the necessary action will make it worse not better," wrote the business chiefs in the letter which was published in The Daily Telegraph newspaper.

Signatories included the managing director of Microsoft UK, Gordon Frazer, and the chairman of retailer Marks and Spencer, Stuart Rose.

The letter was drawn up by Simon Wolfson, chief executive of British clothes retailer Next and a Conservative politician in the upper chamber of parliament.

"The cost of delay is enormous, and would result in almost 100 billion pounds (160 billion dollars, 115 billion euros) of additional national debt by the end of this parliament alone," which lasts up to five years, said the letter.

"In the end the result of delay would be deeper cuts, or further tax rises, in order to pay for the extra debt interest. The cost of delay could be even greater than this.

"As recent events in some European countries have demonstrated, if the markets lose faith in the UK, interest rates will rise for all of us."

The government is battling to reduce a record deficit, forecast to hit 149 billion pounds in 2010/2011. The spending review will be the biggest test for Prime Minister David Cameron's coalition since taking office in May.

George Osborne, the finance minister, said Sunday the cuts -- expected to average around 25 percent over four years in many departments from April -- would restore credibility to a country that had been on brink of bankruptcy.

"If we're going to have growth and jobs in the future, we've got to move this country into a place where people can invest with confidence," he told the BBC.

But finance spokesman for the main opposition Labour party, Alan Johnson, warned the cuts were being made "too deeply and too quickly".

© 2010 AFP

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