City Bosses Tell Osborne To Axe 50p Tax Rate

Some of the City's top business leaders have urged Chancellor George Osborne to "accelerate" plans to scrap the 50p rate of tax but the Prime Minister hints it could stay.

They claim the rate cut should be implemented as an "immediate action" to shore up Britain's economy against the fallout from the eurozone crisis.

The reduced rate will help attract entrepreneurs to the UK and increase the tax-free personal allowance by £1,000 more than planned next year, the group said in the letter published in the Daily Telegraph.

But the Prime Minister has hinted it is here to stay for the time being.

"I have been very clear - we have all been very clear - that we have to do this in a way that is fair so that the broadest backs bear the biggest burden," David Cameron told the BBC.

"That is why we haven't changed for instanced the 50p tax rate."

Deputy Prime Minister Nick Clegg said millions of people on ordinary incomes are currently worried about making ends meet and paying for Christmas.

"I do not believe the priority at a time like that is to give a tax cut to a tiny, tiny number of people who are much, much better off than everybody else," he said.

The business leaders' call came as Business Secretary Vince Cable confirmed the Government was making contingency plans amid the "Armageddon narrative" of the potential collapse of the euro.

Europe's economic crisis deepened on Thursday as Economic and Monetary Affairs Commissioner Olli Rehn warned: "Growth has stalled in Europe, and there is a risk of a new recession."

Overall EU GDP - the combined national wealth of the 27 member states - is now projected to "stagnate" until well into 2012, with the commission downgrading its growth forecast of 1.8% next year to 0.5%.

The only optimism was a projected return to "slow growth" of about 1.5% by 2013.

David Cameron has called on eurozone leaders to "act now" to save the single currency but warned Italy poses a "clear and present danger" to the eurozone's future.

That would "damage our economy" and our banks, he warned.

UK Treasury officials are drawing up contingency plans to deal with the impact on Britain of a collapse of the single currency.

The City bosses also called for a hike in spending on infrastructure projects to help revive Britain's ailing economy.

"We would encourage an acceleration of the Government's commitments on two areas of tax policy: increasing the personal allowance and restoring 40% as the top rate of income tax," the letter said.

"An early removal of the temporary 50% tax rate would attract wealth generators to the UK and support the entrepreneurs we need to help us grow the economy and provide jobs.

"We await the conclusions of the HM Revenue and Customs evaluation of the sums raised by the 50% rate; however, we are confident that the cost to the Treasury, if any, in the short term will not be material and that the advantages over the life of this Parliament in terms of generally increased economic activity will more than outweigh any direct costs."

The suggestion was criticised by union boss Brendan Barber, General Secretary of the TUC.

He described the signatories as a "bunch of very rich people saying that they should make the ultimate sacrifice of paying less tax to help the economy".

Mr Barber added: "Any plan for growth should ease the position of low to middle-earners, not the super-rich."