RING-fenced budgets for health and overseas aid could jeopardise the UK’s economic recovery and future growth, says Chamber

RING-fenced budgets for health and overseas aid could jeopardise the UK's economic recovery and future growth, according the Huntingdonshire Chamber of Commerce.

Protecting money allocated to certain budgets and programmes without clear justification will force more drastic cuts to the capital investment essential to the recovery in the long term, said chief executive John Bridge, ahead of next week's emergency budget.

Chancellor George Osborne is widely expected to confirm significant cuts to capital investment plans.

Mr Bridge said it was essential for the Chancellor to put business growth at the heart of government policy, and resist punishing taxes on private sector growth.

"Our greatest fear is that short-term tax increases and cuts to infrastructure spending will damage business confidence and delay economic recovery, hindering job creation and discouraging business investment.

"While we do not endorse spending your way out of a recession, indiscriminately slashing investment in infrastructure will have a catastrophic effect on the private sector's ability to drive the economy forward. The decision to ring-fence spending on health and overseas aid is less than sensible and unsustainable in the current circumstances, unavoidably resulting in deeper and more drastic cuts to important investment elsewhere.

The East of England was relying on a "sensible and co-ordinated strategic approach" to help it remain one of the three most productive areas of the UK, added Mr Bridge.

"In particular the renewal of transport infrastructure must continue, even in the face of the toughest public spending climate in decades.

"Our members would like to see the Chancellor turn his attention to the public sector wage bill, which is utterly out of touch with the real world, and commit to the urgent reforms needed to rein in the huge costs of public sector pensions."

"The government must avoid punishing new taxes that negatively affect private sector growth. Short-term revenue gains would be outweighed by longer-term economic consequences, from reduced business investment to lower rates of job creation. If tax rises are unavoidable, they should be targeted at consumption taxes rather than payroll, income or profits."