Politicians must stop 'playing politics' and work together to come up with a credible plan for growth, the Federation of Small Businesses (FSB) has warned.

The message follows shadow chancellor Ed Balls' call for the reversal of the 20 per cent VAT rate at this week's Labour Conference.

In a speech, where he claimed that cutting the deficit too far, too quickly is not working, Ed Balls laid out five immediate steps that the Government should take. These include reducing VAT to five per cent on home repairs and maintenance for a one year period.

But the FSB believes the UK should follow the lead of other EU countries and introduce a limited and temporary VAT cut in the construction and tourism sectors for a year.

Nevertheless, the FSB claims that Labour should have more up its sleeve, and that real talks on how to rebuild and strengthen the recovery should take the place of political posturing over the size and speed of cuts.

John Walker, National Chairman, Federation of Small Businesses, 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.

"The economy is too fragile to be kicked around like a political football during party conference season. 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."