The forecast for public sector net borrowing by the end of 2009 is £185 billion, meaning substantial spending cuts will be required in order to plug the gap.
In view of this, the FPB has submitted its proposals for 'responsible growth' ahead of the Pre-Budget Report, which is expected to take place in November. Measures include improving existing support schemes, reducing small firms' corporation tax, tax incentives for micro-businesses recruiting staff and introducing a comprehensive regulatory review.
"Despite recent suggestions that the economy is heading out of the woods, it is clear there is still a difficult road ahead. Government cuts should not include those programmes that are making a real difference for struggling firms," said the FPB's policy representative, Matt Goodman. "The next 18 months will be crucial. As the main drivers of growth, small businesses need to be placed at the heart of plans for economic recovery so they can make the most of future opportunities."
"At the same time, the Government will have to consider the impact of recession on public finances. We believe our proposals are a cost effective path to responsible growth."