Major new report by Sajid Javid MP and Centre for Policy Studies sets out a vision for economic recovery after the pandemic.
‘After the Virus’ is the first detailed post-crisis blueprint for how to renew growth across every part of the UK.
Former Chancellor warns that the crisis is likely to exacerbate the regional disparities the Government committed to tackling in its manifesto, and that ‘levelling up’ is now more critical than ever.
Javid is calling on the Government to review the UK tax system and rewrite the fiscal rules to prioritise balancing the budget, but only after the recovery is secure.
Recommendations include significant temporary cuts to employer’s National Insurance and VAT to boost employment and growth, and notes that any tax increases would be ‘self defeating’.
The paper sets out critical need to dramatically increase infrastructure investment, bringing forward ‘shovel ready’ projects, overhauling delivery and the planning system.
Report stresses vital importance of Bank of England independence but argues that the Government and the Bank should consider a shift in its remit from targeting inflation to nominal GDP, in order to better deliver sustained growth.
Sajid Javid MP, the former Chancellor, has joined forces with the Centre for Policy Studies - the leading centre-right think tank - to set out a series of recommendations to Government on how to kickstart the economy and minimise the long-term damage from the coronavirus crisis.
The report, ‘After the Virus’, is the first in a major series of CPS papers on the economic recovery, under the banner of ‘Going for Growth’.
The paper argues that it is now increasingly unlikely that we will see a V-shaped recovery. The impact of the crisis, the need to maintain social distancing, and the hit to consumer and business confidence, represent formidable headwinds to renewed economic growth.
In ‘After the Virus’, Javid and the CPS say that the Government’s immediate priority should be to prioritise growth, rather than derail the recovery with tax rises or spending cuts. They suggest a new fiscal rule in which the Government brings the current budget into balance within three years, but only when a stable recovery has been achieved.
The report argues that any recovery must be based on sound money, a dynamic private sector and low taxes, as well as a renewed commitment to invest heavily in infrastructure to drive growth across the country, and prevent the coronavirus exacerbating regional disparities and stagnant productivity.
The report contains 63 recommendations. Key proposals include:
‘After the Virus’ looks at the pressing problems resulting from the COVID-19 pandemic, but also considers the underlying issues the UK was already facing pre-crisis. These include increasing productivity, levelling up the regions of the UK, boosting business investment, and achieving net zero greenhouse gas emissions.
The Rt Hon Sajid Javid MP, said: “If we want to secure the strongest possible recovery, it’s essential that no stone is left unturned. This report sets out more than 50 ideas for maximising growth, supporting businesses and creating new jobs at speed.
My colleagues in government have done a fantastic job supporting the economy so far. I hope this report proves helpful for the task that lies ahead.”
Robert Colvile, Director of the CPS said: “This report sets out a programme for economic recovery which combines the new drive for levelling up and public investment and with the pro-market, low tax agenda the CPS has always championed. This is a vision for growth driven by a private sector with the incentives and flexibility to invest and create jobs, empowered by an infrastructure revolution.”