IEA Economics Fellow Julian Jessop has written for City AM discussing the Chancellor’s options ahead of the budget after news that borrowing in the financial year-to-January was £9.2bn less than the OBR’s projections.

Julian wrote:

“The temptation may be to use almost all of this £20bn for another round of pre-election tax cuts. But the law of diminishing returns often applies in politics, as well as economics.

“Which taxes to cut also depends on what exactly the economic benefits are supposed to be – a question which is not asked often enough. 

“The UK’s economic problems clearly run deep, and tax cuts alone will not fix them. There is an urgent need for the government to pursue pro-growth policies across the board. 

“This should include regulatory reforms, measures that improve rather than hamper the flexibility of labour and product markets, and more action to tackle the productivity crisis in the public sector. Unfortunately, this agenda is far less popular.”

Read Julian’s full piece here.