Leading business figures have backed calls from the Institute for Economic Affairs (IEA) for the government to implement similar policies to those that contributed to the best period of economic growth in recent history.
These include slashing and streamlining taxes in order to build a “bright future”.
Wetherspoons founder Tim Martin, JP Morgan VP Laurence Hollingworth, and Port of Bristol owner Terence Mordaunt were among a host of MPs and economists to sign an open letter to Chancellor Rishi Sunak suggesting steps that the government should take to bolster the UK’s economic recovery from the coronavirus pandemic.
“Conditions for growth are not a mystery: we have seen them in the UK in the recent past. In the last 40 years, the highest period of growth of government revenue was 1993-2003.
“This coincided with a period of strong GDP per capita and productivity growth”, the letter, from IEA chairman Neil Record said.
The letter then listed a number of policies that were in place across the decade, saying that the “conditions that pertained at the time make a convincing case for the policies needed to stimulate and sustain our economic recovery”.
These included a top rate of income tax at 40 per cent, corporation tax ranging between 33 per cent and 19 per cent, and a VAT rate of 17.5 per cent.
The decade also saw the highest rate of Stamp Duty on residential property stand at no higher than four per cent, as well as lower regulation across the financial services, labour market and energy sectors.
“Governments have choices. This government may not choose to adopt some or any of these successful policies.
“At the very least, however, this evidence should weigh heavily on any decision-making”, the letter concluded.
The letter was signed by MPs such as the Eurosceptic Steve Baker, Greg Smith, and Andrew Lewer, along with the former chair of the London Stock Exchange.
Record commented: “Economists have had a poor recent track record of forecasting. So rather than building yet another model of the economy to help guide advice to the Chancellor, I have looked back at periods of UK economic success and growth within the past 40 years.
“I have identified the best decades within that period, and analysed the taxation, fiscal and regulatory policies that helped create those successful periods.
“If decisions made now can recreate that success, then despite the terrible damage wrought on the economy by Covid-19, the future can be bright.”