IFS issues warning over ‘piecemeal’ response by Truss to economic turmoil
THE director of the Institute for Fiscal Studies has warned the “piecemeal” U-turns announced by
Liz Truss’s government will not go far enough to reassure markets and economists over the direction of the Prime Minister’s economic plan.
Paul Johnson has stressed Ms Truss is yet to demonstrate how the Government will return the UK economy to “fiscal sustainability” despite two humiliating reversals over her tax policy.
Mr Johnson told Radio 4’s PM programme:
“We still have no statement of economic policy, of fiscal policy, or any sense of how we’re going to get to fiscal sustainability.
“And I think the issue is that credibility has been lost and these piecemeal announcements, piecemeal announcements of sacking a chancellor or changing one tax here or there, aren’t going to cut it.
“We are desperate to get to this statement on October 31, when hopefully we’ll see the forecasts, and we’ll actually get a statement from a chancellor saying this is how I’m going to deal with it.”
He also pointed to a “change in tone” from the Prime Minister on spending cuts.
Mr Johnson added: “On Wednesday, we heard the Prime Minister say no spending cuts. Today we’ve heard the Prime Minister say spending less quickly than planned, well, as I say, less quickly than planned sounds a bit like cuts to me.”
Responding to Ms Truss’s statement, Charandeep Singh, deputy chief executive of the Scottish Chambers of Commerce, said: “Scottish businesses have been urgently looking for the UK Government to address ongoing economic challenges and uncertainty, and to provide firms the clarity and support that they need to make it through the growing cost emergency.
“The instability of recent weeks has frozen investment and impacted livelihoods, it was therefore critical the UK Government responded to the concerns of business and the markets.
“Businesses always seek a lighter tax burden but the priorities that are on the top of our agenda are rocketing energy and fuel bills alongside rising inflation and interest rates.
“The UK Government must now prioritise restoring fiscal credibility to give businesses and investors confidence to invest, as well as a longerterm plan to support businesses through what will be a challenging winter.”