It’s a strategy that requires pushing back against Treasury orthodoxy, as well as ensuring the Bank of England keeps inflation at bay. Our economic institutions must evolve, do their jobs and serve the people. Unfortunately, Boris Johnson’s government has failed to have a coherent economic strategy. During his chancellorship, taxes went up – not down. What was promised did not materialize. An obsession with the budget deficit developed. This has to change. The decision to increase the National Insurance tax last fall was financially unwise and avoidable. While a new prime minister can take decisive action, that person must also ensure that people are realistic about what can be done immediately. Mr Johnson broke the Brexit deadlock. Now, it is up to the new leader to resolve the challenges and deliver the opportunities that lie ahead. It is a process, not a single event. UK economic growth and productivity collapsed after the 2008 crisis. This fueled the Treasury’s view that low growth calls for higher taxes because much of the budget deficit is structural. Mr Johnson and Mr Sunak have failed to push back on this misguided thinking. It’s like being in a hole and digging deeper. With the margin of error even a year ahead, official budget projections are huge, predictions of what might happen in the coming decades should not limit the ability to act now. We face two immediate challenges of rising inflation and an economic slowdown that could turn into a recession. Tighter monetary policy is needed to curb inflation. With confidence collapsing and domestic demand weakening, focused tax cuts are logically justified. I suggested that Mr. Johnson provide “early, targeted and temporary” help to those most in need. Implement this essential measure. People on low incomes suffer. Further such assistance will be needed this fall. However, other tax cuts are still needed and can be made without causing inflation, provided they are also timely and targeted. Further reduction of fuel taxes. Cancel the planned increase in corporate tax, while it is important to combine it with attractive investment rights. The compressed waistline should also no longer be ignored. The basic income tax rate can be reduced without causing inflation, but the timing must be aligned with other developments. The supply-side agenda needs to focus on all of It – investment, innovation, infrastructure and getting the incentives right, with low taxes and smart regulation. This will help reduce inequality and should inspire younger people. The UK has more universities in the world’s top 100 than the rest of Europe combined. We must capitalize on this. Likewise, our vocational training needs to be strengthened, as it should keep pace with the green agenda that can be central to regional policies. This begs the question, who would be best to deliver on this economic vision, not to give in to groupthink, to focus on growth rather than debt servicing costs and to really stand up for the UK globally? To me she is Penny Mordaunt.
