Stop treating the economy like a football, Ed Balls told

Ed Balls needs to stop playing politics with the economy and support entrepreneurs with a credible plan for growth, the Federation of Small Businesses (FSB) has demanded.

Criticising the call of Labour, led by shadow chancellor Ed Balls, for a full reversal in the 20% VAT rate, the FSB said the UK should instead follow the lead of other EU countries and introduce a one-year VAT cut for small businesses in the construction and retail sectors only. 

National chairman John Walker said: "The FSB is concerned that without a more aggressive and proactive approach to promoting growth that the economy will stagnate and decline. While we agree with Labour that something needs to be done, we believe that a full reversal of the VAT rise is not the answer."

By cutting VAT to 5%, as opposed to a £5bn cash injunction into "rushed infrastructure projects", the employers' organisation said growth would be kick started, jobs would be created and the Treasury would benefit from increased revenues.

However, primarily focusing on VAT reduction is not enough, the FSB said, so it also called for Labour to have more policies to rebuild and strengthen the recovery and work with other parties to achieve it.

According to the FSB's analysis of Labour's plan to cut the deficit in its election manifesto, the party would have made a similar level of cuts to government spending; around £14bn compared to the coalition's £16.5bn in 2011-12.  

"The economy is too fragile to be kicked around like a political football during party conference season," John Walker added. "We need to see all the parties working together and putting economic recovery first. The political sparring between parties about the cuts is not the answer and so tangible policies which deliver growth must be put in place to boost growth, jobs and UK plc."