The Chancellor of the Exchequer Alistair Darling has defended his forecast for economic recovery by the end of this year and insists that his new 50 per cent tax rate for high earners is ‘fair’

The Chancellor of the Exchequer Alistair Darling has defended his forecast for economic recovery by the end of this year and insists that his new 50 per cent tax rate for high earners is ‘fair’.

Speaking at the annual convention of the Institute of Directors (IoD) Darling said, ‘Where I think there are grounds for more confidence is the amount of money we have put into the economy, and the fact that interest rates are low and likely to remain low… It’ll take time to work its way through but it will have an effect.’

While insisting that ‘no chancellor wants to raise tax if they can avoid it’, Darling defended his decision to make top earners pay more.

‘Frankly, I think it is fair to ask those with the broadest shoulders to shoulder some of the strain, because every one of us has an interest in making sure that, as a country, we have sustainable public finances,’ he said.

Darling insisted that he was forced to raise tax and reduce spending growth to make up for a shortfall in tax revenue caused by shrinking profits. ‘If you do not fix the banking sector, you will never fix the economy,’ he added.

But Miles Templeman, director general of the IoD, commented that the 50 per cent tax rate sent the wrong message to entrepreneurs. ‘It is a slippery slope; we have already seen how the tax has risen from 45 to 50 per cent before even being introduced,’ he argued.