THE Confederation of British Industry (CBI) has called for £2bn worth of Budget tax cuts to give a much-needed boost to business investment.

It has warned Chancellor Gordon Brown that, despite healthy public finances, he could stoke inflation in his March 7 Budget by releasing too much money, making a cut in interest rates less likely.

But it also made it clear that the Government could afford to pump some extra cash into the economy, at what is likely to be the last Budget before a General Election.

The CBI said Mr Brown's top priority should be cutting the business tax burden further than the measures announced in his pre-Budget report.

Digby Jones, director general of the CBI, said: "The Chancellor could and should offer companies greater incentives to invest. Manufacturing investment is particularly weak, and that could hold back improvements in productivity and economic growth."

But he said: "While tax cuts of more than £2bn are clearly affordable, in my judgement they would not be advisable."

The CBI completed its 40-page Budget submission after a six-month consultation process, involving companies of all types, sectors and sizes.

These proposals are in addition to the £1.75bn cut in road taxes, which the Chancellor suggested in his pre-Budget report. The CBI believes that making modest tax reductions and allowing further cuts in interest rates is the best way of responding to fears of a global slowdown.