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IEA Responds to Spring Statement 2019

IEA spokespeople comment on Spring Statement public policy

Commenting on the Chancellor’s economic planning for a potential ‘no-deal’ scenario, Economics Fellow at the Institute of Economic Affairs Julian Jessop said:

“Even if MPs vote tonight to take ‘no-deal’ off the table, it would remain a possibility. 

“In planning for such an event, the Chancellor’s instinct consistently seems to be to spend money rather than cut taxes, despite the fact that the UK’s tax burden is now at an almost 50-year high.

“The £39 billion saved from leaving with ‘no-deal’ could fund a one percentage point cut in the basic rate of income tax, a one percentage point cut in the standard rate of VAT, and a further one percentage point in the main rate of corporate tax – for three years – helping employers and already hard-pressed families.”

Commenting on the Chancellor’s move to exempt PhD-level roles from the visa cap, the IEA’s Head of Political Economy Kristian Niemietz said: 

“The Chancellor has moved in the right direction by exempting PhD-level roles from the visa cap. There is no reason to have arbitrary restrictions on skilled migrants, who contribute hugely to the economy, not to mention the UK’s tax revenue.

“But this should mark the beginning of a much more radical change around the treatment of skilled migrants. All migrants who enter the UK via the Tier 2 work visa route are highly skilled, whether they have a PhD or not. The cap on Tier 2 visas should therefore be abolished entirely, and immediately.

“Highly-skilled migrants are a very popular immigration group in the UK. There is no need for a cap on talented workers who clearly contribute to UK finances and our economy.”

On the £3 billion Affordable Homes Guarantee scheme, Kate Andrews, Associate Director of the IEA said:

“Having tried and failed in their top-down approach, the Government is still trying to address the housing crisis through central planning, which the Chancellor himself estimates will only add tens of thousands of homes to the market.

“People of all ages are struggling, not simply to get on the housing ladder tomorrow, but even to imagine when they might be in a financial position to buy a home. And those who want to move house or downsize are prohibited by distortionary taxes such as stamp duty.

“Politicians must get serious about tackling this crisis by liberalising the planning sector and tackling classification for non-desirable parts of the green belt.”

On the review of global tech giants, the IEA’s Economics Fellow Julian Jessop:

“The proposed review of the digital economy should focus on measures that are likely to strengthen competition and empower consumers, rather than increase the burden of taxation. Fiscal policy is not the right tool to address problems in the sector and there is little evidence that tech giants are paying less than their fair share of tax.

“If the Government is committed to increasing competition in the sector, it should scrap the planned Digital Services Tax, which involves a lot of effort to raise a relatively small amount of money and risks keeping smaller and newer players out of the market.”

On the Chancellor’s UK economic forecasts , the IEA’s Economics Fellow Julian Jessop said: 

“The downward revision to UK growth in 2019 needs to be seen in context. Many other economies have also slowed sharply, including Germany, France and Italy. The UK has actually held relatively up well and is likely to outperform the euro area as and when Brexit uncertainty clears. Indeed, the ONS has already revised up the forecasts for growth in later years.”

Spring Statement 2019: Philip Hammond's speech

NOTES TO EDITORS:

Media Enquiries

The IEA have a range of spokespeople available for interviews around the Spring Statement.

For media enquiries please contact Nerissa Chesterfield, Head of Communications: nchesterfield@iea.org.uk, 07791 390 268 | 020 7799 8920

Further IEA Reading:

Download IEA report Let’s get ready for ‘no deal’ here.
Download IEA report Immigration: Picking the low-hanging fruits here.
Download IEA report ‘The Key to Affordable Housing’ here.
Download IEA briefing ‘Supervising the tech giants’ here.

About the IEA

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.

The IEA is a registered educational charity and independent of all political parties.

Original article link: https://iea.org.uk/media/iea-responds-to-spring-statement-2019/

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