PM warns on Labour's economic plans
Prime Minister David Cameron has warned that a Labour government would drive the UK economy "into a wall", as business leaders voiced opposition to Ed Balls's plans to restore the 50p income tax rate.
The shadow chancellor has announced that he would reverse the coalition Government's decision to cut the rate paid on earnings over £150,000 to 45p, as he set out a binding pledge that Labour would balance the books, run a budget surplus and cut the national debt if returned to power in 2015.
His plans sparked a ferocious response from business leaders, with 24 warning in a letter to the Daily Telegraph that a 50p rate would "put the economic recovery at risk" and cost jobs.
Mr Balls insisted Labour is not "anti-business" and said said he was "proud" of the party's record on public spending during its time in power.
But Mr Cameron told the BBC Radio 4 Today programme: " I saw what Ed Balls said yesterday, which as far as I could see was that, if he had his time over again, he would probably spend even more.
"I think these people seem to have learnt absolutely nothing from what went wrong with our economy, that the problems were based on too much borrowing, too much spending, too much debt.
"They are really saying if you gave us the keys to the car, we would drive it exactly the same way into exactly the same wall."
The 24 signatories to the Telegraph letter included Ocado chairman Sir Stuart Rose, Kingfisher chief executive Sir Ian Cheshire and Neil Clifford, chief executive of footwear retailer Kurt Geiger.
They said: "As business leaders, we are concerned to see Ed Balls, the shadow chancellor, and the Labour Party calling for higher taxes on businesses and business people.
"We think that these higher taxes will have the effect of discouraging business investment in Britain. This is a backwards step which would put the economic recovery at risk and would very quickly lead to the loss of jobs in Britain."
Meanwhile, Conservative Mayor of London Boris Johnson branded the 50p proposal "stupid" and urged the Government to cut the rate to 40p to establish some "clear blue water".
Denouncing Mr Balls's plans in his column for the Daily Telegraph, Mr Johnson wrote: "Given the choice, he would rather have a higher rate of tax than higher tax revenues. He would rather have the exquisite pleasure of seeming to stick it to rich people than stimulate the growth and the investment that actually produces more taxation. He would rather cut off his nose to spite his face. How can he possibly be so stupid?"
He added: "Confounded by the recovery, Balls is floundering badly. The Government should open up some more blue water, and cut the top rate back to 40p."
Labour's economy spokeswoman in the London Assembly, Fiona Twycross, said Mr Johnson had shown he was "the mayor for the 1%".
"Despite 60% of the public supporting a 50p tax rate for earnings over £150,000, today he called for it to be cut further to 40p," said Ms Twycross.
"When times are tough it is only right and fair that those with the broadest shoulders bear the greatest burden. Since Boris was re-elected in May 2012 he has met with senior bankers at least 10 times. Yet he cannot find the time to visit a food bank and see first-hand how ordinary people are struggling to earn enough to feed themselves and their families."
Lloyd's of London chairman John Nelson warned the return of the 50p rate, together with Labour's promises to freeze energy prices and shake up banking, could damage investor confidence.
He told Today: "The confidence level is a brittle thing. We've got a number of policies that have been announced recently which could affect business and the economy in a serious way.
"We've had the issue of energy pricing, we've had the issue of bank reconstruction ... and now increasing tax at the top rate.
"All of this, I think, does not really encourage investment, particularly from overseas."
While some of Labour's aims were "laudable" the solutions "in economic terms and in business terms are not necessarily going to produce the right results".
He added: "As far as the Labour Party are concerned, they are saying they are not anti-business, but I think that some of the solutions that they are coming up with need to be thought through very much more carefully because one of the key issues that they have got to try and do is to encourage investment into the economy and get more balance into the recovery."
He called for measures to let wealth "trickle down" and warned: "If you keep on oppressing business and oppressing returns you will end up in a situation where you will not create the resources for increased rewards for the working community."
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