THE Institute of Directors has backed the Government's debt-busting cuts.

Reacting to yesterday's spending review, it issues the following statement.

"We very much welcome the Government’s determination to stick to its overall plan of reducing public spending by £83billion over the next five years.

"The key to getting the private sector recovery underway is macro-economic stability.

"This will only be achieved with sustainable public finances.

"Opponents of the spending reductions need to wake up to that fact."

It added that between 1991 and 1997 public sector employment fell by 600,000 – roughly on a par with the falls projected as a result of the Spending Review – but this did not prevent a sustained upturn in economic growth.

It said: "Similarly, in the late 1990s the sharp fiscal squeeze introduced by Gordon Brown over the 1997-99 period went hand in hand with strong economic growth.

"Whilst growth prospects are not as good now, they are not as bad as the gloom merchants would have us believe."

The IoD has maintained that the only area of public spending that should be ring-fenced was that for key infrastructure.

It said: "Consequently we welcome the fact that although transport investment faces an 11% reduction over the next four years, it could have been far worse.

"The spending settlement for transport, energy and ITC investment is better than we had feared.

Gerry Jones, South West Regional Chairman of the IoD, said: “We strongly support the Government’s determination to stick to its overall plan of reducing public spending quickly.

"The only way we get a private sector recovery underway is through macro-economic stability, and this will only be achieved with sustainable public finances.

"Opponents of today’s spending reductions need to wake up to that fact.

"The alternative is a tax hike which would damage the economy in both the short and long term.

“If the spending review is to succeed the Government will have to deliver fundamental root and branch reform which transforms the productivity of the public sector.

"We need to remember that if the public sector had matched the private sector’s productivity growth over the last decade, the deficit would now be £60b less than it is. Less can be more.”