Hunt needs 'more targeted incentives' to boost growth, says new adviser
The Chancellor's new adviser Anna Valero said that using any extra fiscal headroom for tax cuts risked preventing much-needed spending and also backed calls to consolidate pension schemes to boost investment.
She told Bloomberg: "Reducing the tax burden in order to try and achieve some quick fix on growth is unlikely to happen, but also would prevent our ability to invest in some of the things we need to be investing in so I would favour more targeted incentives."
The UK has suffered from particularly weak business investment since the financial crisis despite having the lowest headline corporation tax rate among the G7 economies.
Ms Valero said the Chancellor should significantly widen the scope of business investment incentives to include intangible assets and boost research and development. She said:
We are quite ungenerous when it comes to investment incentives.
I would want to see a more generous regime for really incentivising the types of investments we want for productivity and growth.
Plant and machinery is one area, but there are many other assets we need to be investing in so intangible assets for example which are really important in the UK (as) we are a services based economy, and R&D.
Good morning
It is not a typical message delivered to a Conservative chancellor by their advisers.
Jeremy Hunt's new economic adviser has told him that using tax cuts as a "quick fix" to boost growth will not work.
Anna Valero has instead told him to widen the scope of his new business investment stimulus to boost the economy ahead of the next general election, after a bruising night for the Tories in local elections across England.
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What happened overnight
Asian stocks rose, the dollar eased and gold hovered near record highs as investors worried that a rout in shares of US regional lenders earlier this week could herald more trouble for the banking sector.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.4pc higher and was on course to snap its two-week losing streak as investors bet that the Federal Reserve may soon have to cut interest rates.
China shares fell 0.7pc, while Hong Kong's Hang Seng index was up 0.6pc.
As investors flocked to safe haven assets, spot gold moved closer to its record high and the yen appeared set for its first weekly gain in nearly a month.
It comes after Wall Street stocks dropped Thursday following another brutal sell-off in regional banking shares, in the wake of four bank failures since early March.
Shares of PacWest Bancorp slumped 50.6pc, First Horizon plunged 33.6pc and Western Alliance Bancorp dropped 38.5pc.
The Dow Jones Industrial Average fell 0.9pc to 33,127.74. The broad-based S&P 500 shed 0.7pc to 4,061.22, while the tech-rich Nasdaq Composite Index lost 0.5pc to 11,966.40.
Thursday's losses came after the European Central Bank followed the Federal Reserve in hiking interest rates a quarter-point.