OBR chair Robert Chote today said there was no evidence George Osborne's flagship cutting of the 50p top rate of tax in the budget will promote growth.
The chair of the Office for Budget Responsibility (OBR), Robert Chote, today said there was no evidence George Osborne’s flagship cutting of the 50p top rate of tax in the budget will promote growth.
He told The Guardian the OBR’s analysis was that there was no evidence to show that the measure would have a positive effect of the kind mentioned by Osborne in his budget speech, in which the chancellor said the cut would improve Britain’s competitiveness.
“We didn’t feel that there was a strong enough evidence base to say our long-term or medium-term view of the economy is now more optimistic than it was beforehand as a result of that measure.”
In a further slapdown to the Tory right, who in addition to cheering Osborne’s slashing of the top rate of tax for the rich (while taking more from the poor), clamour for a euro break up and Greek exit, Chote warns such a scenario risks plunging the UK into a “long-term recession”.
“The concern is that you end up with an outcome in the eurozone that creates the same sort of structural difficulties in the financial system and in the economy that we saw in the past recession, and that that has consequences both for hitting economic activity in the economy, but also its underlying potential.
“And it’s the latter which has particular difficulties for the fiscal position, because it means not just that the economy weakens and then strengthens again – ie, it goes into a hole and comes out – but that you go down and you never quite get back up to where you started.”
• Even Tory voters oppose abolition of 50p rate 19 Mar 2012
• It’s official: the 50p tax rate raises revenue 9 Jan 2012
As Left Foot Forward noted on Monday, eurosceptics should beware what they wish for.
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