“To achieve a sustainable recovery, the UK must take broad policy action in areas such as financial markets, green growth and innovation, employment and equity, health, education and public governance” said Secretary-General Angel Gurría following the release of the OECD report United Kingdom: Policies for Sustainable Recovery.
Fiscal sustainability and finance reform
Ensuring fiscal sustainability was a key point made in the report, which could be achieved through implementing the consolidation plan, raising the retirement age, and ensuring full independence for the recently created Office for Budget Responsibility.
The regulatory framework for the financial sector is also in need of reform through national measures and constructive engagement at the international and European level. The creation of a “firewall” between high risk investment banking and commercial banking was also recommended.
Growth though environmentalism and innovation
Green growth should be promoted and incentives created for the private sector to invest in green technologies and undertake climate adaptation actions. The full cost of carbon should be charged with a recommendation that the Climate Change Levy should become a full carbon-tax, the reduced VAT rate for domestic energy use should be abolished, and the economic and environmental efficiency of other green taxes should be reassesed. A national road pricing scheme to mitigate road congestion was also recommended. Moreover, investment in innovation, infrastructure and R&D should be prioritised in spending even though fiscal consolidation makes severe budget cuts necessary.