Calls for Tax Cuts and Bank of England’s “Restrictive Remit” Overhaul Intensifies as a Part of Growth Strategy Amid Coronavirus crisis

 A free market thinktank masters, who are said to be in close association with the Conservative Party have called on to the government for tax cuts and overhauling the “restrictive” remit of Bank of England. This strategy is believed to boost the economy growth in country as a recovery measure to pandemic crisis. 

Policy Exchange, UK’s leading thinktank has advised the government to relax policies regarding rising debt and also use cheap credit as a way of boosting economy by producing and protecting more job opportunities. Policy Exchange was co-founded by Cabinet Office Minister Michael Gove. 

The thinktank has projected that due to slashed economy in country due to pandemic crisis, the unemployment rates can be pushed to as low as in 1980s. The group elaborates that by cutting down on taxes and borrowing costs, the Treasury would be able to further increase the deficit, thereby boosting economy. 

Kickstarting the housing market is a major component for economy boost. Cut in VAT and house sales’ stamp duty will take care of this venue. 

The continuous rise in public spending deficit is a major concern according to the chancellor. The deficit can touch 320 pounds mark this year and even top that. This is believed to push the debt to GDP ratio for UK beyond 100%

Gerard Lysons a consultant at Policy Exchange, who was also Boris Johnson’s economic advisor during his London mayor term, said that policies must be developed by Bank of England so as to achieve a GDP growth rate of 4% before inflation hits. This will allow the aggressive approach in the stimulus program of Bank of England. 

The reports suggested by Lysons indicate that inflation will remain to be low for an extended time and therefore also the interest rates. With demand stooping record low during lockdown, the inflation rate in April tumbled to record 0.8%, lowest in four years.

In the Pro-growth economic strategy paper by Policy Exchange, it said, “The low cost of debt means the UK should not attempt a fiscal consolidation post-crisis and let higher debt take the strain of higher spending and borrowing. Cuts to spending, or increases in taxation, run the risk of undermining any recovery and make little sense in the current economic environment.”

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