The recovery is flatlining and the political parties need to work together to ensure a return to growth and as such politicians should stop playing politics with the recovery and come up with a credible plan for growth to support the UK's small businesses, is the message that the Federation of Small Businesses (FSB) will take to the Labour Party Conference.

Labour, through Shadow Chancellor Ed Balls MP, has been actively calling for a reversal in the 20 per cent VAT rate. However, the FSB believes that this is wildly unrealistic and could cause more harm than good to the already fragile recovery.

Instead 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 one year.

Cutting VAT to five per cent in these strategically important sectors could kick start growth, lead to job creation and increase revenue to the Treasury, as well as widen the tax base. This would be a much better use of money than spending £5 billion on rushed infrastructure projects which might not be 'shovel ready' and any lost revenue would be made up from additional demand, jobs and wider economic activity.

The FSB is also calling for Labour to have more policies for growth up its sleeve than just the VAT cut and for the political posturing over the size and speed of the cuts to make way for real talks on how to rebuild and strengthen the recovery.

Analysis of Labour's plan to cut the deficit in its election manifesto shows that it would have made a similar level of cuts to Government spending – around £14 billion to the Coalition's £16.5 billion in 2011-12.

So, the FSB is urging all the political parties to talk more about policies that will boost growth and less on the level of cuts. With recent economic data and forecasts showing that the economy is not going to grow as much as predicted in 2011, it is clear that Government, with the support of the Opposition, needs to pursue a more aggressive approach to growth.

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."