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Daily Express: Tax cuts and pro growth policies

ended 15. February 2024

A journalist on the Daily Express would like answers to the following questions. 

With the latest GDP figures and the UK now in a recession, and inflation stuck at 4%:

- What tax cuts should Jeremy Hunt announce in the Spring Budget?
- What other pro-growth policies should the Government consider?
- Is the recession likely to continue for the next quarter and longer, or is the economy likely to now be recovering?
- What does a recession mean for everyday consumer finances?
- What are the major issues causing the economic slump?
- What radical policies should the Government consider - including whoever is in power after the General Election - to boost growth in the economy?

10 responses from the Newspage community

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Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
With the latest GDP figures released today, the UK has officially entered a recession - some would argue we have been in one for some time. The Spring Budget, will now present even more opportunities for the Chancellor to address economic challenges - introducing tax cuts needs to be designed correctly and to specific target audiences, as could stimulate spending and investment, which could increase government spending - on the other hand, the defibrillator needs to be rolled out now to get the economy motoring again, and we could see The Bank Of England ease base rates, earlier then forecasted.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The economy is going backwards, the population getting poorer and the amount of tax we are paying is at a 75 year high. Cutting certian taxes can stiumulate growth, be deflationary and reduce the burden on households across the country. A simple and permenant cut in VAT would be welcomed, it's not been this high since it was introduced in 1973. Reducing the effects of fiscal drag and significantly increasing the personal allowance would also allow most of the population to keep more of their money. This would be progressive and affect the lowest paid the most. A cut in business taxes, like national insurance and corporation tax, would allow businesses to invest more and recruit quicker. The immediate tax hit to the treasury would be more than made up by the increase in revenue these companies would be making over the course of a parliament. The problem is we have a government and chancellor who are too cautious than the circumstances demand; continued stagnation in the inevitability.
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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
None of the political parties have a credible solution to restart the British economy even though the UK has felt like it has been in recession for some time. Growth will come from tax cuts, rate cuts and by making it easier to do business. With a budget next month, the first is more likely.
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Editor
Chris Barry
Director at Thomas Legal
The branding "recession" actually means very little for consumers and businesses day to day. in reality, GDP has been flirting with zero growth for a long time now so whether the lagging data shows we are just above or below the line in largely irrilevant.

What really matters is the UK has seen no ecinomic growth for a considerable period, mainly due to Brexit, the war in Ukrain and Covid19.

This goverment, and the next, need to take radical steps by investing in initatives to make the UK more self sufficiant. The UK econemy is being overtaken in world rankings by countries far newer in economic terms.

Over the past 40 years, China, India and the middle east have invested heavily in infrustructure, manufacturing, housing and technology. The UK import pretty much everything and survives off being financial services capital of the world but even this crown is being taken away as most companies now would rather list on the NASDAQ over London.

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Philip Dragoumis
Director and Owner at Thera Wealth Management
The best pro growth policy would be for the goverment to announce an election today.
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Akhil Mair
Director at Our Mortgage Broker
Jeremy Hunt should cut income tax for middle and low-income brackets and lower corporate taxes to boost spending and business growth.

The government should invest in infrastructure, deregulate for entrepreneurship, and incentivise research and development.

While recovery may be near, ongoing monitoring and interventions are vital.

During recessions, consumers struggle financially, requiring government aid.

The economic slump results from decreased demand, supply chain disruptions, and policy uncertainty.

To stimulate growth, the government should reform taxes, invest in green tech, and foster public-private collaboration.
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Keith Budden
Managing Director at Ensurety
We feel caught in the proverbial 'Catch 22' - we need to boost economic activity while at the same time not driving up inflation which increases (or slows the decrease of) interest rates. Personally I think a good move would be to cut the rate of VAT (especially for the hospitality/leisure sector) by 10% and the general rate of VAT by 5% for a restricted period (say 3-4 months). This should drive up personal spending without impacting on inflation. The joy of a VAT reduction is it is a benefit to everyone, not just the higher paid (or lower paid come to that!). It would also prove a real Brexit benefit. Yes it's short term but I think it would give the economy the kick it needs.

We really need to get the economy into action again, we can't continue in this permanent sense of malaise which is suppressing business activity. Let's do it, let's head for the sunny uplands, not the continuous cloudy valley we appear to have found ourselves stuck in.
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Luke Thompson
Director at PAB Wealth Management
Although we have just entered a technical recession these anaemic growth figures have been happening since the 2008 economic crash. Consecutive governments have failed to invest properly in infrastructure and have looked at consistently making cuts to budgets and when they have spent money it has mostly been wasted.

Tax cuts at the moment aren't necessarily the answer most small business owners will actually be more concerned by high interest rates and rising bills and staff costs.

I would say the start of 2024 has been slightly more positive but don't expect rapid growth we are stuck in a cycle of poor productivity and low paid, low skilled jobs. This is what needs to be tackled by the government upskilling the workforce so that wages increase for the poorest and overall economic growth becomes stronger. Isn't this what Brexit was supposed to bring? 4 years later we are still waiting to see these benefits because of poor government planning.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
The upcoming spring budget could deliver the kickstart the economy needs. Whilst being stuck between a rock and a hard place of needing to give the UK population some breathing space to manage their finances, have some cashflow and have a good standard of living. I fear however based on previous news announcements that once again the government will deliver a budget that is tasked at short term populism, such as the 99% mortgage scheme. Nothing of substanance, nothing to fix the economy, which to the everyday resident of the country has been in recession for a long time now and nothing to stimulate growth. I hold little faith.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Everyday finances are squeezed to the point of passing out. Businesses and consumers are struggling to stay afloat as we rearrange the deck chairs on a ship that's taking in water. Government policies are short on solutions to our chronic economic problems, except maybe those short-term fixes that curry favour with voters as we approach an election. We need strong leadership and decisive action to increase productivity, tackle rising costs, put more money into people's pockets and support business growth.