Tax cuts can revive our f lagging economy

REFLECTING on official data that showed Britain had slipped into recession, Jeremy Hunt adopted a ‘glass half-full’ tone.

Of course it was bad news, said the Chancellor, but there was ‘light at the end of the tunnel’. Thankfully, it doesn’t appear to be the light of an oncoming runaway train.

Yes, GDP shrank by 0.3 per cent in the last three months of 2023, following a 0.1 per cent decline in the previous quarter. But this was the mildest start to a recession for many decades.

Indeed, when the Office for National Statistics revises its figures, it may be that we have escaped it altogether.

Having endured the traumas of Covid, the Ukraine war, the cost of living squeeze, soaring mortgage rates and public sector strikes, it’s frankly surprising recession hadn’t hit before. For that, Rishi Sunak and his Chancellor deserve great credit.

And there is another reason to be thankful. Recessions in the 20th century saw devastating mass redundancies. This time we have been spared that distress, with unemployment still at historic lows.

The mood is also brighter on the consumer front. Inflation is falling, wages are rising and the latest cut in National Insurance will feed through into household pockets.

With wearying predictability, embittered Remainers blamed the recession on Brexit. Yet we have avoided the kind of economic collapse suffered by Germany and others in the EU. Moreover, Japan has slipped into recession. Was that because the Land of the Rising Sun said ‘sayonara’ to the bloc too?

And while Labour sneered about the Tories’ tattered economic record, it is desperately trying to deflect attention from its deepseated problems with anti-Semitism.

The real issue now is how Britain can turbocharge the economy.

That it has stagnated for so long should be a stake through the heart of the implausible orthodoxy peddled by mandarins and halfwits that high taxes would boost growth. They clearly haven’t.

So too with mass immigration. While successive governments have imported ever more cheap labour to prop up GDP at all costs, there has been no incentive for firms to invest in boosting productivity.

Now is the time for the Government to cast off the shackles. The Bank of England, dismally behind the curve throughout this crisis, must cut interest rates to encourage consumers and businesses to spend.

And if ever our cautious Chancellor needed to deliver a shot in the arm, it is now. He must press ahead with serious tax cuts in the budget, tackle the worklessness crisis and, as promised, squeeze the bloated state.

There is still time to get a spring back in the country’s step before the election – but it is running dangerously short.