Jonathan Isaby, Director of The Growth Commission’s important message is as follows:
Dear friends and supporters,
Yesterday we published our Spring Statement Briefing, setting out a raft of proposals for the Chancellor of the Exchequer’s urgent consideration ahead of the Spring Statement she will deliver in Parliament at 12.30pm tomorrow. There is a summary of the key recommendations on our website. It all comes against a backdrop of two successive quarters of falling GDP per capita – the best measure of whether living standards are improving and the yardstick against which Sir Keir Starmer has said his Government’s economic success should be judged.
Thanks to all of you who attended our briefing in Westminster yesterday morning, but for those who were unable to make it, you can watch the entire event on our YouTube channel.
Our Chairman Shanker Singham presented our key recommendations and was joined by Return to Growth author Lord Moynihan of Chelsea for a discussion moderated by Sunday Telegraph journalist Liam Halligan. This was followed by an audience Q&A session including contributions from the floor from former Prime Minister Liz Truss, Shadow Business and Trade Secretary Andrew Griffith MP and several other former government ministers including Sir David Davis MP, Sir John Redwood and Steve Baker. Click here to watch the event in full.
WATCH: Our Spring Statement Briefing event
We have concluded that the country is facing a triple whammy of crises:
- There is a growth crisis: Since June of last year, the data we have suggests GDP has decreased by 0.1% and over the same period growth in GDP per capita has been negative
- There is a fiscal crisis: in the four months of new data since the Office for Budget Responsibility issued its last forecast in October 2024, the combination of revenue shortfalls and spending overruns has amounted to £12.8 billion
- There is an exports crisis: Since the end of 2022, UK export volumes have fallen by 4.6% and seem to be on a continuing falling trend
We are calling on the Government to take immediate action on a number of fronts if the UK is to escape continued economic stagnation, including:
Taxation
Tax changes to encourage talented and wealthy people to work and invest in the UK would likely have a disproportionately beneficial impact and stem the exodus of millionaires from the UK, which is significantly hitting tax revenues. We suggest the Government should:
- Unfreeze income tax allowances, end the punitive marginal rates on those earning more than £100,000 as tax allowances are phased out and end the high marginal rates of combined tax and benefit withdrawal in middle income ranges for families with children
- Scrap plans to abolish non-dom status
- Bring the corporation tax rate into line with the proposed U.S. tax rate of 21%
- Increase capital recovery allowances to more completely reflect the full cost of plant, equipment and structures
- Abolish the so-called ‘tourist tax’, whereby tourists to the UK are required to pay VAT on their purchases
Regulatory reform
- Abandon the Employment Rights Bill which will impede labour market flexibility and make it harder to hire people
- Repeal the 2008 Climate Change Act which is much of the reason why the UK has the most expensive energy in the world
- Do not apply a Carbon Border Adjustment Mechanism which would be another growth-killing measure
- Repeal the Town and Country Planning Act and eradicate the major historic impediments to planning
- Scrap the establishment of Great British Railways and Great British Energy which risk crowding out private sector investment
Public spending
- Eliminate certain public arm’s length bodies which often work to preserve the status quo and are not independent from those they seek to regulate
- Act to reverse the fall in public sector productivity
- Reduce the welfare bill, in particular by seeking to understand and reverse the recent rise in the number of claimants of disability benefits
- Look at hastening the pace at which the retirement age is set to rise
Trade
At a time when the U.S. is actively looking at imposing tariffs on trading partners, we have modelled the likely impact of two possible scenarios: one, in which there is no trade deal with the U.S., which in turn imposes 25% tariffs while the UK undertakes a regulatory dynamic alignment reset with the EU; and a second where there is a U.S.-UK trade deal, no U.S. tariffs on the UK and resulting regulatory reforms:
The economic benefits of the second scenario on GDP are stark, which is why we conclude that achieving a good U.S. trade deal must become a UK priority.
Shanker wrote this article for the Sunday Telegraph summarising the top lines of our recommendations and was interviewed after our briefing yesterday about it all on LBC News, which you can listen to by clicking here. Last night he ventured onto Times Radio for another interview – listen here – while the points raised by him and Lord Moynihan during the briefing yesterday on the Employment Rights Bill were also written up for this morning’s edition of The Sun.
That’s all from me for now – keep an eye out for our response to what Rachel Reeves has to say later in the week…
Best wishes,
Jonathan Isaby
Director, The Growth Commission
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