Cut, Tax, Grow?
Ian Brinkley, Alexandra Jones and Steve Overell
30 May 2010
As the new government grapples with reducing spending in order to cut the UK’s very high public sector deficit, it also faces the challenge of encouraging and supporting a fragile private sector recovery in order to increase revenues. It is a tightrope: not only does the government need to be sensitive to the state of the economy when setting the pace of public sector cuts, it also needs to ensure that limited spending prioritises support for high growth firms of the future. Most of the public debate to date has focused on two of the three options available to government – cutting public spending and raising taxes. The third option – encouraging growth and job creation in order to raise revenues – has thus far received little attention in the public debate. This paper aims to help redress that balance.
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