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East Midlands Chamber News

Chancellor George Osborne unveils his plan to make the Midlands an 'Engine of Growth'Chancellor George Osborne is expected to use his Mansion House Speech later this evening to introduce tough new rules to force Governments to run budget surpluses.

It is thought Mr Osborne will confirm the plans for a "balanced budget" principle, which will be overseen by the Office for Budget Responsibility.

He will justify the tougher regulations by arguing that the general election result represented a ‘comprehensive rejection of those who argued for more borrowing and more spending’.

Under the proposed rules, it is expected that ministers will spend less than comes into the public coffers when the economy is running "normally", as defined by the OBR. Full details of the scheme will be released in next month’s Emergency Budget.

Chris Hobson, Head of Information and Representation at East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire), said: “While running a balanced budget with a surplus should be a key aspiration for any Government, history has shown that the UK will need some fiscal flexibility to enable it to respond to any unforeseen events in the global economy.

“If the Chancellor is serious about continuing to rebalance the UK’s economy – and in particular, enabling the Midlands to be the UK’s ‘Engine for Growth’ – then any moves to constrain future spending should exclude infrastructure investment.

“In order to boost productivity and ensure our businesses can compete on the global stage, they need the transport, energy and digital infrastructure in place to enable them to do so.

“For too long, Britain's infrastructure needs have been sacrificed to short-term spending considerations. Infrastructure costs money. It is an investment, not just a cost. As such, it should not form part of the debate about deficits and the national debt.”