As the election campaign nears its final week, parties are launching their final attempts to sway the opinion of the masses. The Conservatives have now outlined a plan to set in place a new law that guarantees no rises in income tax, VAT or national insurance before 2020, if they are re-elected in the general election.
The Prime Minister, David Cameron, suggested that workers paid a sufficient level of tax at present, and the Conservative plan is to target tax avoidance and welfare matters as a priority, in a bid to curtail the deficit.
Cameron said: “This is the clearest choice on the economy for a generation. And beyond the plain facts, it also comes down to gut instinct. When you’re standing in the polling booth, ask yourself: on the things that matter in your life, who do you really trust?
“When it comes to your tax bill, do you trust the people who taxed you to the hilt when they were in power and still haven’t come clean about the taxes they want to increase next time round? Or do you trust the Conservatives, who have cut income taxes for 26 million people, and who will cut your taxes again next time?”
During a discussion on Radio 4’s Today Programme, the shadow chancellor Ed Balls said: “These promises from David Cameron are two a penny. The Tories will raise VAT to make their sums adds up while my sums already add up."
Mr Balls confirmed his reasoning for this view, as he claimed that it was unlikely the Conservatives could completely remove the deficit by their estimate of 2017-18, without the need to increase the rate of VAT. As previously noted by Labour, Mr Balls pointed to the lack of details from the current government about how they would fund the £12bn cuts to welfare, a keystone in the Conservative election campaign.
For the Liberal Democrats, Danny Alexander was quoted as stating, “Until the Tories actually come clean with people about the savings they really want to make, people will simply not believe this sort of pledge because George Osborne has simply not made his sums add up.”
Regarding the wider economic outlook, the Office of National Statistics confirmed that the UK economy grew by 0.3 per cent during the first quarter of 2015. It was expected that the rate would be closer to 0.5 per cent over the period, and the figure is the lowest on record since the 0.1 per cent rise seen in the final quarter of 2012.
The three cornerstones of UK industry saw reductions in growth, with construction dropping by 1.6 per cent, agriculture by 0.2 per cent and production down by 0.1 per cent.
Economic experts are not taking this drop as a sign of the economy weakening, however, and the general perception is that the economy will continue to grow in 2015. Anna Stupnystka, an economist for Fidelity Worldwide Investment, suggested that the second half of the year will see improvements to growth, as the housing sector begins to pick up post-election.
Despite this positive view, Stupnystka did also note that any upward movement would not be instantaneous: “The strength of the pound, however, particularly against the euro, will remain a drag on growth this year. With inflationary pressures subdued for a bit longer, the Bank of England is still unlikely to deliver its first hike this year.”
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