LONDON - Liz Truss is set to become Britain's prime minister this week with her plan to"turbo-charge" the economy by slashing taxes already worrying investors amid double-digit inflation.
"We have a number of concerns about the dependence on the kindness of strangers to fund the UK when the public finances are likely to deteriorate materially," said Mark Capleton, strategist at Bank of America Corp. Energy costs are set to absorb as much as a 10th of household spending, pushing as many half of the UK's 28 million households into fuel poverty.
She has been deliberately vague about the details, but in broad terms it has three prongs: Tackle the immediate cost-of-living crisis with support for households and business Kick-start growth with £30 billion of personal and business tax cuts Lift the productive potential of the economy with supply side reforms. The details, though, remain largely a mystery
Former Bank of England Deputy Governor Charlie Bean, who was also a member of the government's fiscal watchdog, the Office for Budget Responsibility, believes launching a policy experiment in the middle of a crisis is unwise. Taken individually, none of Truss's policy proposals are extraordinary. Her promise to reverse April's increase in national insurance and scrap next year's planned rise in corporation tax merely put tax policy back where it was at the start of 2020. Britain has reviewed the BOE mandate before, and Canada does it regularly.
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