Giving his 82nd – and final – inflation report, King highlighted a ‘welcome change’ in the economic outlook. For the first time in five years, he was able to predict stronger growth and weaker inflation.
Some of the economic data back up this optimistic assessment. Inflation fell significantly in April, while unemployment, though rising, remains almost 100,000 lower than a year ago. And, of course, the UK has avoided a triple-dip recession.
But not everybody sees things this way. Prominent among the doubters is the International Monetary Fund, which has placed the UK in the third-speed group when it comes to economic recovery.
As David Walker points out in this month’s cover feature, the UK is ‘down among the dead men’ when it comes to growth. The IMF expects the UK to grow by 1.5% in 2014, whereas the US should expand by 3% and China by a whopping 8.2%.
Meanwhile, austerity continues apace at home despite earlier IMF suggestions that Chancellor George Osborne should change course.
Osborne has put more emphasis on spending cuts than tax increases in his three years guarding the country’s coffers. But he might have reached the limit of what is acceptable and achievable in a civilised country.
All the more important then for him to consider tax-raising alternatives as he prepares for the June 26 Spending Review. One option – discussed by the chancellor in our opinion section (pages 10–11) – is a clampdown on tax avoidance by multinational companies.
This is an issue about which there is considerable public concern. Any money raised might not be huge, but every little helps, and it would send out an important signal.
Progress has been made already – following agreements with the British Overseas Territories and European Union finance ministers – and more could be done. However, as Osborne writes in PF, ‘acting alone has its limits’. International co-operation is vital to avoid companies exploiting loopholes elsewhere.
Fortunately, the UK has an opportunity to press the issue as part of its presidency of the G8. Prime Minister David Cameron has already said that fair taxes will be one of the three themes of our presidency.
With G8 leaders gathering in Northern Ireland on June 17–18, we won’t have long to wait to find out if he has been successful.
