Sound money and low taxes are principles that all aspiring conservative leaders on both sides of the Atlantic claim to hold almost sacred. They remain as central to the message of the Conservative and Republican parties as they were during the ascendancy of Ronald Reagan and Margaret Thatcher, now more than 30 years ago.

Their successors have invariably invoked the names of these 1980s icons in support of their own favored policy positions. And rightly so, since the stunning successes of Reagan and Thatcher in turning the United States and Great Britain around offer important lessons for every world leader today, as the global economy once again faces the challenges of the 1970s: soaring inflation, weak economic growth and mountains of government debt.

Yet in the race to lead the Conservative Party, there is some discrepancy between words and deeds. Even as Rishi Sunak brandishes his admiration for Margaret Thatcher, he is citing her as a reason not to cut taxes now, lest it should fuel inflation. This is the wrong approach. As a former aide to Mrs. Thatcher, I don’t doubt that her advice today would be to cut taxes aggressively and tame price rises by reducing government spending, which is the single biggest factor fueling inflation.

The British economy is once again in urgent need of a reboot. It needs to dramatically shift away from the misguided, big-spending approach of the past two years of the COVID pandemic. Post-Brexit Britain should be a shining beacon of low taxation, yet according to the Heritage Foundation’s annual Index of Economic Freedom, today the UK economy is the 17th most free in Europe, behind even Germany. This has to change.

>>> 2022 Index of Economic Freedom

Britain did prioritize reducing inflation in the early 1980s, before substantially cutting the tax burden. Inflation fell from a staggering 21.9 per cent in May 1980 to just 2.4 per cent by the summer of 1986. However, Thatcher’s government never wavered from the principle that it was taxpayers’ money, not the state’s. The goal was always to bring taxes down, reduce government spending, and free up the great entrepreneurial spirit of the British people.

The Reagan and Thatcher revolutions and their mutual embrace of free market capitalism and fiscal conservatism were intimately intertwined.

Reagan moved at a faster speed in reducing the tax burden. When he came to office, one of his first acts was to reduce personal taxation. He did not see inflation as a reason to avoid cutting taxes. The administration’s 1981 Economic Recovery Tax Act advanced the most aggressive tax-cutting agenda in modern American history, with a comprehensive 25 per cent cut in personal marginal tax rates. This kick-started an extraordinary economic recovery following the malaise of the Carter era. Tax rates were lowered further with the Tax Reform Act of 1986.

The next occupant of No 10 should take a leaf out of both the Reagan and Thatcher playbooks. Both were dedicated tax cutters, who moved at different paces during their time in office. Both believed that free market capitalism and reducing the role of the state were fundamental to fueling economic growth and, ultimately, bringing down inflation as well.

If Britain is to thrive and flourish in the Brexit era, it must be prepared to throw off the shackles of big government and once again embrace the principles of economic liberty that made it such a powerful force on the world stage for centuries.