Growing pains

7 September 2011 By Ian Campbell

The UK chancellor is toning down hopes for UK growth. Tax cuts, as suggested by some economists, would help growth and are desirable. But the deficit reduction plan looks behind the curve, making it hard for Osborne to justify cuts. Faster spending cuts would have helped.

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George Osborne, the UK chancellor, said on Sept. 6 that “we have all had to revise down our short-term expectations over recent weeks.” He added that in terms of “fiscal responsibility” the UK was “ahead of the curve.” He said the government would “stick to the plan we have set out.”

Twenty prominent economists called for the UK chancellor to abolish the 50 percent top rate of income tax in a letter to the Financial Times. They wrote that they are “concerned that Britain’s 50 pence income tax is doing lasting damage to the UK economy. It gives the UK one of the highest personal tax regimes in the industrialised world, making it less competitive internationally and making us less attractive as a destination for both foreign investment and talented workers.”

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