Any future Government will be forced to cuts pending or raise taxes by £7 billion a year to meet Chancellor Gordon Brown's economic rules, business leaders warned yesterday.
The Confederation of British Industry warned that tax rises would be "extremely damaging" to the global competitiveness of UK business, and urged all parties to focus instead on cutting public spending and reducing waste.
With high employment and the economy close to full capacity, there is little scope for the kind of faster-than-average growth which might otherwise trim the deficit the new Government is likely to face after the election, expected next spring.
The CBI predicts that at the end of the current business cycle in 2005-06, Mr Brown will either meet his "golden rule" - which states the Government will borrow only to invest over the course of a cycle - or miss it by a "negligible" amount.
But it warned the next cycle would start with a £34 billion deficit, with little prospect of improvements in the public finances without concerted Government action.
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