Jeremy Hunt’s £100bn Brexit freedom boost: Chancellor’s plan to axe EU red tape for investment
Jeremy Hunt’s £100bn Brexit freedom boost: Chancellor’s plan to axe EU red tape will prove he’s set on investment, source says
Jeremy Hunt will put scrapping EU red tape at the heart of a growth plan this week, as he outlines proposals to unlock £100billion of investment.
The Chancellor will use a major speech tomorrow to insist he is serious about boosting economic growth, despite being against tax cuts in the March Budget.
Mr Hunt is expected to focus on plans to scrap EU rules that prevent insurance firms and pension funds from investing in major infrastructure projects, such as roads, nuclear power stations and wind farms.
He will pledge to ditch the so-called Solvency II rules by summer, with Treasury sources saying the move could unlock £100billion in private sector investment over the following decade.
Jeremy Hunt will use a major speech tomorrow to insist he is serious about boosting economic growth, despite being against tax cuts in the March Budget
And he will suggest that a wider bonfire of EU rules this year could help boost productivity and growth. Ministers are pushing ahead with plans to review all EU laws still on the UK statute book this year, potentially consigning thousands of regulations to the scrap heap.
The Chancellor will pledge to tackle the ‘declinist narrative’ peddled by Labour, highlighting the ‘good fundamentals’ of the economy, and Britain’s competitive edge in key industries of the future.
But he will acknowledge the need to improve skill levels and encourage more people back into the labour market.
Pushing for tax incentives
And he will warn that the tax cuts demanded by business and many Tory MPs will have to wait until inflation has begun to recede.
A Treasury source said that the Chancellor would stress his commitment to bringing down the UK’s record tax burden in the longer term but will warn it ‘can’t happen now’, due to the need to tackle inflation and bring borrowing under control.
Mr Hunt has privately warned ministers that the outlook for the public finances could be even worse in March than it was when he unveiled his emergency budget in November, which hiked tax levels to a post-war record.
Mr Hunt is expected to fucus on plans to scrap EU rules that prevent insurance firms and pension funds from investing in major infrastructure projects
A leaked Office for Budget Responsibility assessment yesterday suggested official GDP forecasts will be downgraded by 0.2 to 0.5 per cent due to weakness in the economy and labour shortages.
The downgrade would wipe out the £9.2billion in fiscal ‘headroom’ Mr Hunt pencilled in at the November budget.
But Tory MPs believe that targeted tax cuts are essential to encourage investment and boost growth.
Former Cabinet minister David Jones said a ‘prohibitive’ hike in corporation tax planned for April would deter investment.
He said: ‘I don’t know how the country is going to manage that level of indebtedness if the country is not growing. The Chancellor has got to put pro-growth provisions into his Budget. Simply putting in high taxes that will stifle growth is not what we need.’
Business leaders are also pushing for tax incentives, with the CBI warning this week that the UK is on course to plummet from fifth place to thirtieth in the international tax competitiveness league this year when the 6p rise in the corporation tax rate bites.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: ‘There’s a Budget coming up… we’d hope there are incentives for investment.’
John Longworth, former director general of the British Chambers of Commerce, said: ‘Indicators across the board are that we are heading for a predictable downturn given the Government’s choice of austerity. It is vital that they… go for growth starting with tax cuts.’
The EU’s Solvency II regulations require institutions to keep substantial capital reserves to reduce the risk of bankruptcy. But critics say they have prevented financial institutions from investing in vital infrastructure schemes.
Boris Johnson and Liz Truss both pledged to scrap the regulations, but Mr Hunt will be the first to set a deadline when he pledges to remove them by the summer.