The UK must move forward with tax on the tax

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The writer is the head of the Queens College, Cambridge, a consultant for Allianz and Gramsi

It did not take long after the UK’s financial drama last week to respond to a typical political response to appearing. There was a quick axis of focusing on what happened-the budget of the governmental care bill in government and market settlement scenes in Parliament-to look at how this happened.

However, the economic error will be to postpone the treatment of “what” at a time when financial issues are set to continue to attract great global attention, from the United Kingdom to the United States and beyond.

The fundamental reason for the financial drama of the UK government last week was years in preparation. The growth has stolen amid increasing demands for public spending, including those associated with the epidemic.

The higher taxes, although the materials were not sufficient to reduce an increase in debt, increased the weakness of the economy in the fluctuations of international bond markets. The budget responsibility office also warned this week, the United Kingdom It faces “arduous” risks As for public financial affairs, the high debt burden leads to “great erosion” for its ability to respond to future shocks.

At the same time, the repeated struggle of economic officials to regain control of both growth and financial dynamics have greatly eroded their influence and credibility in the process of making political decisions.

The United Kingdom is not alone in the struggle with financial issues. Last week, the US conference approved what President Donald Trump describes “a big and beautiful bill”, a measure of his close consultant for one time, Elon Musk, who was described as “completely crazy and destroyed.”

Similar issues are prominent in many other economies, including Europe, where there is a strong interest in defense spending and increasing infrastructure, but it is limited in decisive initiatives at the region level.

To complicate matters, this intense financial focus coincides with unfavorable economic and financial conditions. The level of deficit and debt levels are raised historically, and inflation is not yet comfortably to the central bank’s goals.

Meanwhile, interest rates on the market increased. The concepts of borders of high speed of financial spending – including those promoted by supporters of modern criticism – seem far away.

In such a global environment, there is no way to store financial issues. Instead of trying to “reset” by converting attention for political reasons, the government is better advised to regain control of financial narration in the context of economic growth.

This will involve three main elements. The first is to recognize that changing local and international contexts require a review of election promises regarding the increase to one or more sources of basic budget revenues: income taxes, value -added tax and employees on national insurance contributions.

Second, it places the policy of innovation with greater firmness in the center of a more aggressive and equipped growth strategy.

The third greatly improves the quality of economic communication needed to secure the purchase of the private sector for the reforms directed towards growth.

The good news is that there are positive factors for the government.

The UK is already proud of global leadership in some innovations such as artificial intelligence and life sciences that carry a tremendous promise to enhance productivity and growth. Translating this promise into a reality is not related to its installation within the framework of an industrial policy with a backward appearance. Instead, it takes at least a deliberate and sustainable approach to increasing this innovation – for fear that he will migrate to the United States – a better strategy to link ecosystems and systems.

Despite the bond market last week, markets showed a strange ability not only to remind investors that “the economy is not markets” but also to extract a great distinction between sovereignty and companies. As such, the corporate sector was less at risk than in the past to concerns about government debt and deficit.

These conditions emphasize the reason for the necessity of moving forward in the UK government with the inevitable of both financial fronts and growth. Waiting for the clarification of what the majority of economists see is inevitable tax The risk increases more damage to family consumption, companies investing and total growth.

If it is late in acting, the current window on innovation will prove it difficult to exploit it to the generalized economic and financial luxury, and companies will become more vulnerable to sovereign pollution. This is the last thing the government and the economy need.