Rathbones, one of the UK’s leading wealth and asset management groups, today warns that the country cannot tax its way to prosperity and should instead focus on supporting business, investment and economic growth in the Budget.
Rathbones argues that the UK cannot rely on further tax rises or short-term fiscal measures alone to improve public finances. In its new report, Building Prosperity, published today, it says the sustainable route is stronger growth, supported by policies that give businesses and individuals the confidence to save, invest, expand and plan for the long term.
Drawing on its experience of working with clients across the UK — including business owners, professionals, investors, charities and families — Rathbones warns that uncertainty and rising costs risk creating a generation of stagnation, without the enterprise and investment needed to strengthen the economy.
Camilla Stowell, CEO, Wealth, at Rathbones, said: “The central challenge facing the Chancellor is how to restore sustainable growth; the answer cannot simply be to keep asking businesses and individuals to pay more. Economies need to grow out of high debt burdens, and that means backing the people, businesses and investment that create jobs, generate tax revenues and build prosperity across the country.
“Our clients include business owners, professionals, investors and families whose ambition and success support businesses, organisations and communities throughout the UK. Many are ready to invest, expand and plan for the future, but they need stability, confidence and a policy environment that rewards enterprise rather than constrains it.”
The group’s new analysis, Building Prosperity, examines five policy areas facing the Chancellor and argues that a stable, investment-led approach is needed to break the cycle of weak growth, rising debt and pressure for further tax increases. Among its recommendations are to:
-
Reform business taxation
Improve business rates relief and move towards taxing commercial land rather than investment in buildings, while maintaining the current corporation tax and capital allowances regime and strengthening incentives for buildings, software and R&D. - Make devolution work for growth
- Treat increased local power as part of wider growth programme that will not deliver growth unless it works as one aspect of national prosperity.
- Boost investment through the pension system
- Use pension capital to help promising UK firms scale and remain in Britain, while avoiding further measures that discourage pension saving and weaken long-term domestic investment.
- Resist taxes on wealth
- Reject an annual wealth tax and avoid further capital gains tax rises without reforming the tax base, to protect investment incentives and those that invest for the long term.
-
Reinvigorate the housing market
Reform Stamp Duty Land Tax to encourage housing mobility, potentially increasing transactions by 16%, supporting almost 11,000 additional homes a year and lifting GDP by around 0.2%.
Stowell added: “As one of the UK’s leading wealth management groups, we see the contribution that businesses, investors and individuals make to communities and the wider economy. We urge the Chancellor to put growth and investment first — creating the conditions in which businesses can build, people can prosper and the country can meet its long-term commitments.”
Adam Hoyes, Senior Asset Allocation Analyst at Rathbones and lead author of the analysis, said: “The UK’s fiscal challenge is fundamentally a growth challenge. With debt interest, defence, and an ageing population putting more pressure on public spending, increasing investment to drive productivity growth is the most sustainable way to strengthen the public finances. Stable and sensible business taxes and regulation, better-directed pension capital, a more mobile housing market can all raise the economy’s productive capacity and grow the tax base, reducing the need for increases in tax rates to set the public finances back on the right track.”
