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That's not a growth plan - this is a growth plan!
'Rebalancing the economy' and 'promoting growth' have been flagship phrases for the new Government. On Budget Day its strategy for growth will be announced, but a report by independent think tank Civitas shows that current plans do not go far enough.
In Economic Growth - Could the Government do more?, David Green and David Merlin-Jones argue that some of the Government's own policies are major obstacles to recovery.
Civitas Director, David Green, said: 'The Government knows that we need economic growth but does not recognise that its own policies are the biggest problem. Compared with our rivals, company and personal taxes are too high and we have too many time-wasting regulations. Above all, some climate-change policies are pushing energy costs so high that our most important industries could be forced to relocate overseas.'
This one goes up to eleven
The authors present eleven policies:
1. Reduce company taxation. Lower corporation tax to 15% and abolish capital allowances.
2. Eliminate unnecessary workplace regulations. 'One in, one out' has not been thought through and the compensation culture of employment tribunals should end.
3. Reduce the cost of energy. We need competitive energy prices even in the face of climate change regulations.
4. Cut personal taxes to make it easier to start businesses. Reduce the 50% rate and capital gains tax for long-term investors.
5. Create an export-driven national strategy. This will rely on manufacturing: even at maximum output in 2008, financial services generated exports of £52.8bn, while manufacturing achieved £194.2bn.
6. Intelligent procurement. Far more effort must be made to buy goods and services from SMEs.
7. Import substitution. Many imported goods could be made here. We urgently need to reduce our record-high trade deficit in goods of £97.2bn.
8. Make banking more competitive. Creating an industrial bank and promoting German-style local enterprise banks would promote pluralism and sharpen competition.
9. End the unbalanced focus on 'advanced manufacturing'. 'Low-tech' does not mean 'low-value.' Much British manufacturing is advanced in process if not in product and therefore deserves support.
10. Scrutinise foreign take-overs. The free movement of capital may be counter-productive if companies buy up their rivals only to shut them down. The Competition Commission should have the power to veto foreign takeovers if they are not in the national and global interest of nurturing competition.
11. Selective assistance and industrial intervention works. The success of Japan and South Korea shows that a strategy based on domestic rivalry and export champions, rather than national champions, could work here too.
For more information contact:
Dr David Green (Director) on 020 7799 6677
David Merlin-Jones (Reseach Fellow) on 020 7799 6677 or 0794 9811032
Notes for Editors
ii. Civitas is an independent social policy think tank. It has no links to any political party and its research programme receives no state funding.