Business leaders push for ‘realistic’ Budget targets
Chancellor George Osborne should make ‘a radical shift in policy’ in the forthcoming Budget in order to boost the economy in the long term, according to the Institute of Directors (IoD).
Published in its 2012 Budget Representations ahead of the 21 March Budget, the IoD is calling for new ‘attainable’ economic targets to be set, which should be closely monitored by The Office for Budget and Responsibility (OBR).
Urging the OBR to play a greater role in the UK’s economic growth, the IoD proposed two new economic targets including:
A sustainable 3 per cent GDP growth target, and a review of Government policy to see if it is pushing long term growth, to be systematically assessed by the OBR.
A 35 per cent public spending to GDP ratio by 2020.
According to the IoD, the UK’s GDP growth target could fall to half (1.5 per cent) of its projected rate without a policy change. It also argued that meeting the 35 per cent public spending to GDP ratio was a top priority given the pressure from an ageing population that will likely cause it to rise.
The IoD’s director general, Simon Walker, says: “When you strip down future prospects for the British economy two problems are laid bare. Long-term growth is too slow and the Government is too big. We need to tackle both issues and that means targeting them explicitly and charging the OBR with the job of saying whether or not Government policy is making the long-term economic outlook better or worse.
“We need a supply-side revolution with less tax, less public spending, fewer regulations and less burdensome employment law. The time for tinkering on the supply-side is over.”
Other measures from the IoD’s Budget Representations include a review of the personal allowance, abolishing the 50 per cent tax rate, an accelerated reduction in the main corporation tax rate to 23 per cent in 2012/13, and the continuation of the pension tax relief for higher earners.
The IoD now places more pressure on the Government to encourage business growth and avoid what it called ‘a lost decade’ of GDP.
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