Thinktank: UK must drop 50p tax rate to kick-start growth

The British economy needs “a shot of adrenaline” in the form of tax cuts in order to stimulate growth, according to a leading think tank.

The Centre for Policy Studies (CPS) said spiralling unemployment would continue unless George Osborne removed the top-rate 50p tax on high earners, and abolished stamp duty on share transactions.

Only then would the UK return "to the top of the league table" for tax competitiveness, said the report, authored by the CPS's Ryan Bourne.

"The best approach to boost growth is therefore to improve our competitiveness through lowering specific taxes and undertaking regulatory reform - unwinding the burdens of state regulation and reducing the cost of employment," he said.

The report, entitled ‘Adrenalin now - funded, popular tax cuts to boost the economy', also stated that Osborne's deficit reduction plan was considered "credible" by the markets.

"Unsustainable" growth in both the public and private sector needed to be eradicated - and such a move would be popular with the public, Bourne said.

A ComRes poll of 2024 adults found around half (47%) favoured targeted tax cut to combat the deficit, compared to a third (34%) who preferred an increase in public spending.