In a new report published today, 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 the IoD set out fifteen proposals which they claim would, 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 radically improve the supply side of the economy, and have tax, regulatory and planning reforms at the core of these proposals.

The proposals include:

  • To boost demand and kick start the economy, the Bank of England should launch a second round of Quantitative Easing with an initial injection of £50 billion.
  • The Government should announce that Corporation Tax will be reduced to 15% by 2020 which will encourage long term investment and encourage enterprise and job creation in the private sector.
  • The Government should restore the top rate of income tax to 40% in order to address the perception that the UK is high-tax country and demonstrate that the UK welcomes talented entrepreneurs and highly skilled professionals.
  • In order 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 even if that means fighting the EU and Liberal Democrat demands.

Launching The Route Back to Growth, IoD Director General Simon Walker, said:

“No aspect of economic policy is more important than returning Britain to a growth trajectory. 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 policyQuantitative 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

Read or download the full report, The Route Back to Growth here.

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