As the budget looms tomorrow the Centre for Policy Studies' Ryan Bourne says there five things that should be taken into account as chancellor George Osborne will defend the coalition's economy policy. His facts in brief:
- Plan A is already dead, the structural deficit will not have been eliminated within five years.
- Our deficit is extraordinarily high at eight per cent of GDP.
- Over £600bn will be added to public sector debt over the course of this Parliament.
- Planned spending cuts are not deep, only three per cent in real terms across five years.
- Most of the deficit reduction has been in the form of tax rises and investment cuts, not reductions in current expenditure.
Far from being rigid, inflexible and implementing deep cuts, Osborne has pushed deficit reduction back, plans modest overall cuts in this Parliament, and has lowered the deficit so far only by raising taxes and cutting investment. But continued stagnation makes it more obvious we need steps to improve medium-term growth – and one means is cutting the public sector more deeply, alongside substantial supply-side and pro-competition reforms.
Meanwhile the Adam Smith Institute recommends six policies from across the world to renew the UK's economy (the supporting evidence is worth reading in full):
- Abolish capital gains tax, like Singapore
- Cut spending faster, like Canada
- Simplify taxes and regulation, like Georgia
- Liberalize employment law, like Germany
- Cut corporation tax, like Ireland
- Cut taxes for the working poor, like Australia