The forthcoming Budget must announce a ‘radical shift in policy’ aimed at boosting the economy in the long-term, according to the Institute of Directors (IoD).
The business organisation is calling for two new economic targets, to be monitored by the Office for Budget Responsibility (OBR):
- A 3% sustainable GDP growth target, which the IoD says focuses on the long-term sustainable rate of GDP growth. The role of OBR would be to assess the potential growth rate at the present, and on an annual basis assess whether Government policy is pushing long-term prospects up or down
- A 35% public spending to GDP ratio for 2020, which would, according to the IoD, position the UK to compete strongly through the 21st century. The OBR would assess whether fiscal policy was set to achieve this target.
Simon Walker, IoD Director-General, said, ‘When you strip down future prospects for the British economy two problems are laid bare. Long-term growth is too slow and the Government is too big. We need to tackle both issues and that means targeting them explicitly and charging the OBR with the job of saying whether nor not Government policy is making the long-term economic outlook better or worse’.
The IoD is also calling for a number of other measures, including: reversing the tapering away of the personal allowance once income exceeds £100,000; setting a date for abolishing the 50p tax rate; accelerating the reduction in the main corporation tax rate; and maintaining higher rate tax relief on pension contributions.
The 2012 Budget will be presented on Wednesday 21 March. Visit our website for the latest information following the Chancellor’s announcements.