Truss poses greatest risk to economy as she tries to scapegoat Bank, warns City
LIZ TRUSS’S policies pose the biggest risk to the economy out of the remaining Tory leadership challengers, City analysts have warned, after she proposed multi-billion-pound tax cuts and a Bank of England shake-up.
The Foreign Secretary’s “more substantial” economic plan is an “unseemly combination” of stimulative tax cuts and concerning views that scapegoat the Bank of England, economists at Citigroup said.
They fear promises by candidates for sweeping tax cuts could be counterproductive by adding fuel to the fire when fiscal restraint is needed.
Ms Truss, the bookies’ secondfavourite to succeed Boris Johnson as Prime Minister, has set out a plan to ease the cost of living crisis through a £30billion package, including suspending the green levy on energy bills and reversing the National Insurance and corporation tax rises. She has also challenged the Bank of England for failing to control inflation, pledging to look at its mandate to “make sure it is tough enough”.
“Liz Truss’s policy platform still poses the greatest risk from an economic perspective in our view with an unseemly combination of pro-cyclical tax cuts and institutional disruption,” said Ben Nabarro, a Citi UK economist.
“Scapegoating the Bank for the cost of living squeeze is neither correct nor constructive. More worrying here though are efforts to muddy operational independence, which poses questions surrounding institutional credibility.”
‘Scapegoating the Bank of England for the cost of living squeeze is neither correct nor constructive’