Having chastised Bailey for being too sluggish in raising rates, I’m hesitant to let him fall back on bad habits too soon – especially if a looming war in the Middle East sends inflation spiraling once again.
We need higher public sector productivity, lower costs of government, and a lower deficit. This can advanced with tax cuts which lower prices, create more supply, and boost incomes and profits to tax at home.
The sum total of all this is that Hunt’s wiggle room for tax cuts this Autumn is shrinking even further.
As his options narrow, Sunak has little choice but to get back to first principles, which would be the right course anyway.
The Chancellor of the Exchequer adds that “public spending is still growing faster than the economy. Some say that’s inevitable. They are wrong. We need a more productive state. Not a bigger state.”
The goalposts cannot be moved. We have a moral, legal, and economic duty to cut our emissions by 68 per cent of 1990 levels by 2030 and reach Net Zero by 2050.
Excessive increases in the money supply have severe and far-reaching economic consequences. Yet neither ministers nor the electorate have any say over this crucial area.
It is a generation since Margaret Thatcher abandoned Neo-Keynesian thinking, set her face firmly against prices and income policies, and made it clear that the key to tackling inflation was curbing the growth in money.
Whilst spending more nearer to an election is often an election winning strategy, this time it is likely to consign us to defeat.
The twenty-sixth article in a new series on ConHome about how government might be made smaller, taxpayers better off and and society stronger – through strong families, better schools and good jobs.
“I suspect the Labour Party is slowly coming to the realisation that winning the next election is not all it’s cracked up to be.”
Ministers need to drive up public-sector productivity via something-for-something pay deals, and support a supply-side revolution through non-inflationary tax cuts.
He must level with voters about the poor prospects of the public finances – and the need for both a return to austerity and serious decisions around generating growth.
Neither finance ministers nor central bankers should mislead themselves or the public with the promise implied by talk of when interest rates come down.
That is the mission of ARC, the Alliance for Responsible Citizenship, which is holding its inaugural meeting in London. The public want a better, more productive and dignified economy, and a politics and a public culture which honours their values.