The UK tipped into a technical recession at the end of last year and, while early data suggests the downturn is already over, the outlook remains anaemic. The International Monetary Fund (IMF) expects the economy to grow by just 0.6pc this year.
The contrast with the US is stark, where the IMF has forecast 2.1pc growth in 2024.
The UK and Europe have been left scrambling to find an answer to President Joe Biden’s 2022 Inflation Reduction Act, which has injected $500bn into the economy through spending and tax breaks designed to reduce carbon emissions and improve healthcare.
Despite strong growth, Mr Laffer is critical of President Biden’s approach. He believes the President is inflating an economic bubble that will burst.
He said: “Biden doesn’t understand economics. We have been way overspending. In my view, the key to prosperity is spending restraint. Joe Biden has been the antithesis of spending restraint.
“I’m for reducing government spending and reducing tax rates and letting markets really drive the system.”
President Biden is likely to face Mr Trump in the upcoming November election and Mr Laffer said a second Trump presidency would likely see a similar economic approach to his first.
Then, Mr Trump cut the top rate of tax from 39.6pc to 37pc – a move that President Biden has proposed reversing in spending plans he released last March.
Mr Trump’s top rate tax cuts had more success than Ms Truss’s. So did Prime Minister Margaret Thatcher’s. When she came to power in 1979, the top rate was 83pc. By the end of her premiership, it was 40pc.
“That led to an extraordinary period of exceptional growth and prosperity in the UK,” Mr Laffer said.
Baroness Thatcher was a personal friend.
“She and Sir Dennis used to stay at our house in California when she came to the US,” Mr Laffer recalled. “I’ve got all of these pictures of her hugging my kids.”
Mr Laffer would have dinner with her twice a year at her home in Chester Square after her premiership.
“She wasn’t this austere piece of marble. She was a person with a personality and with feelings and humour and sadness. And she was very, very real.”
A Treasury spokesman said: “We will not speculate on whether further tax cuts will be affordable in the upcoming Budget, however our tax burden remains lower than any major European economy and inflation has more than halved.”
