The government must come up with a credible plan for cutting the budget deficit or risk the country's credit rating being damaged, according to the British Chambers of Commerce (BCC).

However, the business body have warned against cutting the deficit too early, which could damage the UK's recovery.

"Cutting the deficit too early would be a major mistake that could unleash a new recession. However, a credible plan for curbing the deficit is urgently needed," said David Kern, chief economist of the BCC.

"Postponing the presentation of a plan would threaten our credit rating with damaging consequences. Any serious plan must spell out detailed measures with a clear timetable, and it must avoid damaging the economy's growth potential."