Senior Tory MP David Davis said that the UK was at the “eleventh hour” in terms of avoiding decades of economic stagnation and unemployment.
Davis, who stood against David Cameron in the 2005 Conservative Party leadership election, told an audience in the City of London that growth prospects looked poor. “Quite simply we are bumping along the bottom,” he said, saying recent GDP figures were “terrible” and “disastrous for our growth strategy.”
“If we do not take coherent and radical approach to galvasinising our economy, there is a serious risk we face a decade in the doldrums,” said Davis, drawing parallels between the UK’s current economic climate and that seen in the late 1970s.
He urged the coalition to pursue a “shock therapy” for the economy similar to the one deployed by the Thatcher government in the early 1980s.
David described the Government’s £50bn in stimulus projects for housebuilding and a relaxation of planning regulations as a “palliative” remedy – the real changes needed to be on tax policy and abandoning new green carbon levies due to hit businesses and energy firms in April next year.
“Inaction could deliver decades of decline and disappointment to a whole new generation,” Davis claimed, criticising both calls for infrastructure investment projects like High Speed 2 and recent arguments from Nick Clegg for more taxes on the rich.
“You can either punish the rich or you can harness the rich,” he said. “Punishing the rich is economically profitable but almost always economically disastrous.”
“The government needs a coherent long term strategy for genuinely lower flatter taxes. That programme would take ten years to deliver, so we should start now and get on with it.”
Davis said infrastructure spending using borrowed money was almost always a bad idea, “sometimes promoted by businessmen with vested interests of their own.”
David warned the Chancellor that time was short if he were to change course, arguing that there was “just about” enough will among voters to accept the last government was to blame for the slump.
“I believe the electorate will decide, as it did with Margaret Thatcher, that the government was simply administering the treatment for the sins of the government before,”.