September 23, 2022

A PARTY RUNNING ON GROWTH? IMAGINE:

Kwarteng brings in a 'new era' of British economic policy - one where growth comes first (Daniel Pryor, 9/23/22, CapX)

Today's 'mini Budget' was proof that the new government are not just talking the talk, but walking the walk: the Growth Plan released as the Chancellor spoke this morning states firmly that 'economic growth is the government's central mission'. Kwasi Kwarteng has put a number on in too, making a 2.5% trend growth target his medium-term aim. After more than a decade of post-financial crisis stagnation and low productivity, such explicit recognition of our central economic problem is hugely welcome.

Granted, when he was Chancellor, Rishi Sunak gave the occasional nod to the virtues of low taxes too, and had slated some income tax changes for a few years down the line. The key difference now is that the policy actually matches the rhetoric: jam today, not jam at some indeterminate point in the future. The Government's tax cuts are unprecedented in modern politics--the biggest tax-cutting event in half a century--and represent the beginning of, in Kwarteng's words, a 'new era' in British economic policy. The days of lazily judging every fiscal change by its immediate distributional impacts alone are over and the 'boosters' are in the ascendancy.

Scrapping the planned corporation tax rise means we will avoid the serious damage it would have done to investment, wages and living standards, with macroeconomic feedback helping to cushion the expected blow to Treasury revenues in the medium term. 

Posted by at September 23, 2022 5:48 PM

  

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