Record GDP drop in 2020 a reminder of need for bold thinking on economy – Carmichael

Orkney and Shetland MP, Alistair Carmichael, has reacted to the news today that 2020 saw a record drop in Gross Domestic Product (GDP), saying this was a reminder that the Government needed to think differently to ensure a durable and dynamic recovery in the run up to the Budget. Mr Carmichael highlighted potential initiatives which should be considered in the upcoming Budget, including continued VAT cuts for tourism and hospitality, investment in marine renewables ahead of COP26, and decentralising economic development to rural and island areas.

The UK economy shrank by a record 9.9% last year as coronavirus restrictions hit output, “more than twice as much as the previous largest annual fall on record” according to the Office for National Statistics (ONS).

“Today’s GDP figures are a stark reminder that we need to put radical measures in place to ensure a strong and durable recovery. The fact that we are a year into the pandemic should not blind us to the fact that we are in an unprecedented economic situation in both its scale and global reach. That requires new thinking to ensure success in the medium to long term. 

“That is why my party has pushed for greater consideration of bold, Liberal proposals like the Universal Basic Income, which could fundamentally change the way our economy and society works. We have a chance as well to reinvigorate investment in green technologies like marine renewables. With the UK hosting the COP26 summit in just a few months, we should be using the Budget to make a statement of intent, to lead the world in wave and tidal power.

“We also need to seriously look at ways to decentralise economic development, by re-empowering local communities and businesses. The pandemic has made a lot of people consider moving away from major cities to more rural areas – instead of trying to force a return to “normal” we have the change to revitalise smaller communities.

He added:

“In the shorter term, the Chancellor must retain the reduction in hospitality and tourism VAT through the rest of this year in the coming Budget, and business rates relief for those who are struggling. As and when we start to reopen our economy, the sectors which have had the sharpest shutdown need all our help to get back to full strength quickly.”

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