UK could face worse than seven lean years

Chris Giles writes in the FT: Forget the granny tax, forget the 50p rate of tax and forget the pasty tax. The most important, but least discussed element of last week’s Budget is the continuing evidence of Britain’s underlying economic weakness.

We would suggest that the first place to look for a supply-side blockage is the tax system, variously estimated to cost the UK economy between 12% and 30% in deadweight losses.

The second place to look is Britain’s dysfunctional property market. Look at the number of “to let” signs in every industrial estate and high street in the land. Rents are not falling to market-clearing levels. In fact, the universality of upwards-only rent revision clauses aggravates the problem. A major blockage to expansion in the good times was lack of availability of premises. The economy of the country is being throttled.

As we constantly assert, the solution to the problem is to shift from present taxes to LVT ie taxation of the annual rental value of land, which is not at all the same thing as a wealth tax, yet a government which holds itself out as pro-business will not even countenance the idea.