An adviser to the Bank of England has called on Jeremy Hunt to slash taxes in Spring Budget to pave the way for a pay boost for working Britons.
Martin Hartley, group CCO of emagine Consulting and member of the Bank of England Decision Maker Panel, said the Chancellor should follow the model of growing economies such as the USA.
He said: “Cutting tax on capital investment could be a positive move as it would encourage more investment into UK businesses.
“It would be a way to create more jobs, offer better pay and increase living standards and would therefore solve a lot of the problems we are currently facing simultaneously.
“It would allow people to give a cash injection into organisations and see a return on their investment, without paying a hefty tax.”
He said slashing corporation tax would also be a good move to encourage more people to become entrepreneurs. He said: “The more people we can incentivise into setting up their own business or investing in a business only creates more jobs and boosts the economy.
“There are also advantages to cutting other taxes such as income tax, but this needs to be balanced to ensure it doesn’t create greater problems down the line.”
The company boss also called for pro-grwoth policies focused on investment in technology, financial services and science businesses.
He said: “If we can invest in these sectors and make the entry to market as easy as possible, and the taxes as low as possible, we would be looking at an extremely positive long-term strategy of generating jobs and boosting the economy.”
The entrepreneur also took an optimistic view of current growth in the economy, despite the news this week the UK has gone into recession, with two consecutive quarters of negative growth, up until December 2023.
He said: “I think people are airing on the side of caution but judging by sales, investment and GDP reports, nothing is really slowing down.
“I think the economy will begin to bounce back when interest rates come down as people will have more disposable income and will be able to spend again.”
However, he said the economy is still taking a hit from the coronavirus pandemic. Mr Hartley said: “The cost of living is applying pressure to people’s finances, and many won’t be spending because their mortgage rates have significantly risen or their bills have tripled.
“People are spending such a large proportion of their salary on mortgages that they don’t have disposable income left over to spend.
“The noise around the recession also makes consumers even more conscious of their spending. When the demand for goods and services is reduced, it will eventually impact business profits and as a result, the need to hire employees is no longer deemed essential and the financial capacity to do so, is severely limited.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.
