Kingfisher group chief executive Ian Cheshire has called on Government to focus on job creation in order to fuel economic growth in the downturn.

Cheshire, speaking from the head quarters of Kingfisher’s French business in Lille, said a VAT cut – which has been called for by some retailers – would derail any recovery, but said efforts to stimulate job creation would boost growth.

Cheshire urged Government to give employers National Insurance holidays as an “an incentive for people to invest and create jobs”. He said that to tackle youth unemployment Government could scrap National Insurance contributions for people under 25 in particular.

“Employment is the key issue,” said Cheshire. He added that a cut to VAT would be “going away from the deficit commitment”.

He said: “It could be short term help for us but bad for the economy.”

Cheshire joined other business leaders in 2010, backing the Tory party’s policy of reversing the then  Labour Government’s proposal to increase national insurance, which they argued would place an additional tax on jobs.

Cheshire said the “next six months will be about confidence” and that Kingfisher was assuming a broadly flat market.

However, he added: “We’re extremely well placed. We’ve outperformed for two years and still have more growth to go for.”

He said that the Eurozone crisis was not hitting the business yet but added that if a resolution was not settled upon before the G20 summit next month it could become “a real worry”.