Share lines
Changing Gear: A Growth Budget to Boost the British Economy- Britain’s economic and political issues must be addressed with a Budget for Growth
- There is a clear need for a radical and pro-growth Budget this Autumn
‘Changing Gear: A Growth Budget to Boost the British Economy’, authored by the Rt Hon Priti Patel MP, is today published by the Centre for Policy Studies (CPS) and explains how and why the British economy urgently needs a Budget for Growth.
The former cabinet minister and key Brexiteer argues that successive Conservative led governments have faced serious macroeconomic challenges. They have stabilised the economy, cut the deficit and overseen record levels of employment. However, despite this success there can be no doubt that the UK economy needs a change of gear.
When the Coalition government took office in 2010, the economic situation that they inherited was the worst since the Great Depression. In response Conservative-led governments since 2010 undertook a series of measures, and the UK economy has been stabilised. But along with other developed economies growth appears to have slipped into a low gear pattern. Having peaked in 2014 (notably two years prior to the Brexit vote) the UK’s growth has been sluggish since.
This report sketches out a pro-growth budget to kick start the UK economy consisting of:
Supply side reforms to the private sector:
- Regional market policies such as Free Ports and Special Enterprise Zones
- Reduced tax and legal complexity for SMEs
- Government commitment to reduce the costs of childcare by adopting similar standards to other European countries
- Housing supply reform to increase the amount of land in the system
Supply side reforms in the public sector:
- Greater employee productivity with all Departments having to set out a plan for this as part of their Comprehensive Spending Review process
- Greater use of IT through sensible and flexible approaches not top down models
- Targeted investment in smaller, higher return infrastructure programs across the regions rather than reliance upon grand projects such as HS2 for economic growth
Pro-growth tax cuts:
- Cutting the tax burden from its 49 year high of 34.6% of GDP
- A £460 cut for all ordinary workers by raising the threshold for national insurance for employees to £12,500
- Stamp Duty Land Tax reductions from their current levels to encourage mobility
- Cuts to business rates and corporation tax changes to encourage investments, most of all allowing companies to write off investment costs in full
Normalisation of monetary policy:
- Revitalising the Bank of England mandate with a focus on asset price inflation and financial imbalances in addition to the existing consumer price inflation target
- Enable a greater focus on distributional impacts while preserving the Bank of England’s independent mandate
This report concludes that Britain’s economic and political issues can be addressed by the incoming new Conservative Prime Minister through a dynamic blend of fiscal, monetary and political policy choices starting with a Budget for Growth.
The Rt Hon Priti Patel MP said:
“Britain needs to kick growth up a gear.
“For too long, our nation has relied on low interest rates rather than undertaking the long term necessary economic reforms the British economy needs.
“My new report highlights what could and must be done to strengthen the base of the UK economy to build a future plan for long term growth. Reforms to release private sector growth, reduce harmful and counterproductive taxes, revitalise public sector productivity, and a fresh approach to normalise interest rates over the medium term.
“We stand at a crossroads and to thrive as a country we must be bold. This report outlines some of the thinking and approach that are necessary for the UK economy to get back on track to deliver long term prosperity and secure our economic future. Our new Prime Minister will need to hit the ground running with a Budget for Growth this Autumn and provide the stability to deliver a post Brexit vision ahead of the October 31st deadline.”
Alex Morton, Head of Policy at the Centre for Policy Studies said:
“The politics of economic growth needs to move centre stage. There is a clear need for a radical and pro-growth Budget this Autumn, and this report shows that thinking about the long-term economic challenges our Country faces must be addressed by a new Prime Minister.
“The report makes the case for serious change, and a new economic vision that builds upon stabilisation of the economy post 2010 without accepting the creeping economic stagnation that has taken root.
“Now is the time to focus on growth across our nation and this report hopefully can help drive that process.”
