IPPR says Chancellor should set out plans on investment and tax following his fiscal reset comments

Alfie Stirling, IPPR Research Fellow, specialising in the economy, responding to the Chancellor’s comments on resetting fiscal policy and Markit's Purchasing Manager's Index, said:

“IPPR have been saying since the referendum result that the UK needs proactive fiscal policy to minimise the negative economic impacts of Brexit.

“In the event of a shock, the Chancellor should set out plans to remove public investment from deficit targets and target debt reduction over a longer time horizon. Extra spending should be targeted at both digital and physical infrastructure projects, and the government should launch a review to explore the best way of accounting for investment in human capital. Those areas of expenditure – such as some elements within education, skills, employment programmes and health – that pass a tight set of criteria such that they can be shown to boost the productivity of our workforce should be treated as a form of investment spending.

“If George Osborne has a legacy it is this: no Chancellor should tie their own hands behind their back before they have even started the job. Theresa May has a reputation for pragmatism: her Chancellor should heed that advice and base decisions on what's best for the economy, not on dusty ideological pamphlets. It is irresponsible for a Chancellor to take tax completely off the table before getting their feet firmly under the desk. It creates unnecessary risk, both to the public finances and the economy.”