Brown should resist the urge to fund extra spending from his war chest, estimated to be as much as £7bn. If he did raise taxes it would help curb inflation, the Chambers said, reducing the need for further rises in the interest rates.
Deputy director general Dr Ian Peters said: ‘The only sensible way for Gordon Brown to fund additional spending on health and education is through increases in personal taxation. The last thing business needs is a further boost to demand overheating the economy.’
The chancellor has built up a huge war chest ahead of the next general election. According to the green budget from the influential Institute of Fiscal Studies, government finances are going so well that Brown could afford to give away up to £7bn in the Budget next month and still meet his fiscal rules.
The BCC also warned against raising taxes which could hurt business.
Dr Peters said: ‘Business in the UK has borne the brunt of the growing tax burden since the general election. With business facing severe competition at home and abroad, the Chancellor must seek to stimulate, not stifle, enterprise.
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