The coalition government's austerity plan must be a 10-year project with no "quick fixes" in order to resolve the UK's economic problems, a think tank said on Tuesday.
Even under the best economic scenario a programme of austerity should be at least a "two-term project with the first term emphasising deficit reduction and the second consolidating the gains", right-of-centre think tank Reform said in its report -- The long game: increasing UK economic growth.
Reform said the government must avoid "prioritising immediate wants while postponing hard decisions" because that is "one reason the UK economy is in the mess it is in".
But Britain did not necessarily face "a lost decade", the London-based think tank said.
Reform said that growth had become a term, like fairness, that is "often used but rarely understood" and that "real growth will not come from government but from a dynamic, highly productive economy".
To achieve a productive economy the independent think tank said the government must ensure maintain its fiscal discipline and that "Plan A" was start. More flexible labour markets, including immigration, a more consistent and transparent tax policy and regulatory policy were also must-haves.
Reform said the 50p tax rate is damaging to growth and should be abolished but cautioned the chancellor not to get rid of it yet but rather with overall reform of other taxes. The think tank also said it's likely further tax rises would be needed to resolve the deficit.
Slow growth and recent economic events such as the debt crisis in the euro zone reinforced chancellor George Osborne's fiscal plan rather than undermined it unlike many critics have argued, Reform said.
"By failing to prudently manage its public finances a country can lose control of its destiny," Reform said.
It said that implementing Plan A wouldn't be "plain sailing" because reform of the NHS had "arguably gone into reverse", meaning that the chancellor would have to find savings from elsewhere.
"To keep Plan A on track, the Chancellor must look to reduce spending further in the less productive areas of government spending such as welfare and health."