Schroders warns early budget cuts could hurt 'fragile' economy

Schroders chief economist Keith Wade has warned Alistair Darling not to attempt to rein in the UK's burgeoning budget deficit too early, believing the UK economy is still "fragile".

Wade says while it is generally accepted the Government will raise taxes and cut fiscal spending, he believes a delay of at least a year is needed to ensure the cuts do not affect the UK's economic recovery. "Through the Queen's Speech they outlined a halving in the deficit within four years," he says. "But they have to be careful not to cut too aggressively. Spending cuts beginning in 2011 would be one option. "Where the axe falls is quite difficult to determine. What they can do is make cuts to the public sector, but the public sector is a big employer in this country."