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Supporting UK growth while balancing the budget – report launch

Government should prioritise tax and spending according to economic impact – business report

London businesses will today (Tuesday 17 November) call upon Government to apply rigorous analysis of economic benefit and cost when deciding tax and spending priorities, so as not to derail London and the UK’s economic recovery.

The call is made in a new paper – Supporting UK growth while balancing the budget – jointly authored by business group London First and City of London Corporation and overseen by a steering group of business leaders. The steering group is co-chaired by Stuart Fraser, the City’s Policy and Resources Chairman, and Ian Powell, PwC Chairman. Drawing from an in-depth economic report (see notes to editors), it considers how decisions on both spending cuts and taxation increases can be made with the least damage to London and the UK’s economic prospects.

The paper, to be launched at a Whitehall venue, restates the role of London as a global centre for trade and investment, and the broad economic benefits it brings to the whole of the UK. Its conclusions include: an approach to Government efficiency savings; the need for
rigorous cost benefit analysis when deciding whether to spend or cut programmed spending; maintaining vital investment in London’s transport infrastructure, and; protecting London and the UK’s international competitiveness when adjusting tax policy.

Ian Powell, Chairman and Senior Partner of PricewaterhouseCoopers LLP, said:

“We recognise that Government faces a huge challenge in re-balancing the economy and the country’s finances. Hard choices on spending and taxes have to be made. Business is saying that these decisions must be taken in a coherent way that best supports the long-term investments needed to create a sustainable recovery for the UK economy. What business craves is a stable, supportive, environment to enable long-term investment decisions to be made.”

London has attracted international talent, businesses and capital to generate globally competitive specialisms in professional services, creative industries, finance and higher education, among others. Each of these sectors supports a large workforce based largely outside London. In every survey comparing the merits of global business locations, the issue of transport is identified as a top priority. London’s transport infrastructure is both an asset and a risk to the capital’s future success, suffering as it has from several decades of underinvestment.

Stuart Fraser, Chairman of Policy and Resources of the City of London said:

“If the UK is to secure sustained economic growth, we must maintain planned investment in the capital’s transport infrastructure. While the committed public expenditure of around £36bn between now and 2017 is substantial, it is modest compared with the scale of London’s economy and the benefits it will bring to the UK as a whole.

“The tax regime is another crucial element of competitiveness. The Government’s approach to taxation must be informed by the factors that underpin the capital’s success as a global centre for trade, including the highly mobile nature of money, and of people, in and out of London. Further rises in marginal tax rates could derail the economic recovery by making London and the UK less competitive than their global rivals.”


Notes to editors

Supporting UK growth while balancing the budget – a report from London business is available in hard copy on request, or online. Report

Supporting UK growth while balancing the budget – a report from London business represents the views of a steering group comprising members of London First and the City of London Corporation, co-chaired by Stuart Fraser, Chairman of Policy and Resources of the City of London, and Ian Powell, Chairman and Senior Partner of PricewaterhouseCoopers LLP. It draws on a report, commissioned by London First, to develop an evidence-based approach to prioritising tax and spending measures that will best support and enhance London’s contribution to the sustainable growth of the UK. The full report was prepared by LECG, a global finance and economic consultancy, and jointly funded by London First members and the City Corporation. Download the LECG report

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