By Marcus Leach
In a new report published today (Monday), the Institute of Directors (IoD) has set out a plan to boost the UK’s economic outlook in the short and long term and defy current pessimism as to the ability of the economy to bounce back.
In The Route Back to Growth 15 proposals are identified which, if implemented by the Government and other policy makers, could make the UK one of the most competitive advanced economies in the world by 2020-25.
As well as boosting demand in the short term with an immediate round of quantitative easing, the IoD proposals are designed to improve radically the supply side of the economy, with tax, regulatory and planning reforms being central.
The Route Back to Growth is being launched by Simon Walker on his first day as IoD Director General.
The proposals include:
· To boost demand in the economy the Bank of England, at the next Monetary Policy Committee meeting, should launch a second round of Quantitative Easing with an initial injection of £50 billion.
· To improve investment flows and encourage enterprise and job creation in the private sector, the Government should declare that Corporation tax will be reduced to 15 per cent by 2020.
· To kill the perception that the UK is high-tax country and demonstrate that the UK welcomes talented entrepreneurs and highly skilled professionals, the Government should restore the top rate of income tax to 40p.
· To halt the gradual erosion of the UK’s flexible labour market and enhance job creation, the Government should revisit its unambitious employment law review and deregulate. The IoD has set out today nine specific deregulatory measures and called for EU employment powers to be returned to national control.
“No aspect of economic policy is more important than returning Britain to a growth trajectory," IoD Director General Simon Walker said launching [i]The Route Back to Growth[i].
"Without the belief that UK economic growth is expanding, confidence will wane, international investment will dwindle and British consumers and taxpayers will be left picking up the crumbs at the tables of faster growing competitors. The Government's deficit reduction programme is a step in the right direction — but it must go faster and further before the economy is on track and prosperity returns.”
The 15 key Route Back to Growth proposals are:
Monetary policy — Quantitative easing; launch QE2 in October with an initial £50 billion
Fiscal rules — A new 35 per cent of GDP public spending target by 2020
Taxation — Remove the 50 per cent top rate of Income Tax
Taxation — Extended Corporation Tax cuts to 15 per cent by 2020
EU policy — Use future Treaty and/or budget negotiations to repatriate key employment powers
Infrastructure — Ring-fence transport, energy and ITC infrastructure spending
Energy policy — Do no harm — don’t sacrifice UK competitiveness for green credentials
Education — Further expand free school provision with profit incentives
Taxation — End the £100,000 personal allowance anomaly
Competition policy — Intensify competition policy both domestically and within the EU
Regulation policy — Radical civil service reforms to promote de-regulation
Employment Law — Nine major changes to free up the labour market
Planning — Incremental ‘Green Belt’ and developer rights to propose, and reduce political influence over infrastructure planning
Public sector performance — Greater decentralisation of public sector pay
Public sector pensions — No watering down of reforms to unfunded public sector pensions.
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