Public spending and taxation must be kept under tight control, the IoD said, because the existing fiscal rules do not prevent higher public expenditure if it is financed by higher taxation.
The institute also called on the chancellor to adopt a new third rule for fiscal policy ð a commitment to reduce the tax burden as a proportion of GDP. It also demanded a firm stand against European tax harmonisation and a reduction on the complexity and bureaucratic burden of the tax system.
Ruth Lea, head of the institute’s policy unit, said: ‘Economic stability is not guaranteed to last. The government must not risk any more increases in spending. The best safeguard against future difficulties is a low-regulation environment to encourage a strong private sector.’
Institute of Directors