'Devalue pound' says Labour donor

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File photo dated 18/03/13 of money as people should be forced to put money into a pension in the same way that they have to pay taxes, according to a think-tank. PRESS ASSOCIATION Photo. Issue date: Wednesday January 22, 2014. Policy Exchange said that a

Labour's largest individual donor has launched proposals for a new economic strategy which he believes would boost GDP growth to 5% and remove the need to eliminate the UK's national deficit.

Businessman John Mills called for a radical devaluation of the pound to boost exports, coupled with a drive to boost investment in business from its current rate of 13.5% of national income to more than 20%.

In a pamphlet entitled There Is An Alternative, Mr Mills accused the Treasury of "short-termist" thinking which had saddled the UK with an economy which consumes too much, invests too little and cannot pay its way in the world.

The UK is competing in a global market where countries invest an average of 23% of national income, while it China it is as high as 46%, he said.

Of the £224 billion gross investment in the UK in 2012, some £176 billion - almost 80% of the total - was offset by capital consumption or depreciation to allow for expenditure on keeping existing assets from deteriorating, leaving only £48 billion - 3% of GDP - as net new investment, said Mr Mills.

"A crucial requirement for getting the UK economy to grow much more rapidly on a sustainable basis would be to get gross investment as a percentage of GDP up to a much higher level than it is at present," he said.

His report, published by thinktank Civitas, set out a model under which the value of sterling falls from 1.60 to 1.10 US dollars and efforts are made to redirect finance to commercial investment in plants, machinery and working capital, as well as retraining workers, developing new production facilities, speeding up planning permission and installing better infrastructure such as roads, rail and high speed internet.

The report argued that achieving growth of about 5% would remove the need to eliminate the budget deficit, as the three main parties plan to do by 2020. Instead it should be allowed to run at 2% or 3% of GDP.

Mr Mills last year gave the Labour Party £1.65 million of shares in his TV shopping and consumer product company JML.

The shrinking value of the pound

The shrinking value of the pound