Politics.co.uk, September 4, Professor Graeme Leach
Following the financial crisis, Great Recession, Brexit and Covid, the UK needs a fresh economic policy. The imminent establishment of a new Prime Minister provides the opportunity to reset economic policy and galvanise UK competitiveness and its attraction for FDI.
A new research paper from the Centre for Brexit Policy (CBP) argues that HM Treasury’s arguments for higher taxes are defective. The current Treasury orthodoxy of raising taxes to strengthen the public finances and bring down the debt-to-GDP ratio is rooted in outdated lessons from the 1980s when economic conditions were very different to today.
As a result, current policies will lead to lower growth and tax revenues and the debt-to-GDP ratio spiralling upwards to 125 per cent of GDP (from 90% in 2021-22) by the mid 2030s due to: (1) Business taxes reducing economic growth. (2) Higher NICs adding to the drag on competitiveness and output.
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Click here to read the associated report in full.