Rishi Sunak’s fiscal strategy is ‘risky’ says Ed Balls
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The former Labour minister accused the chancellor of playing a “pretty risky” game and making the Bank of England’s job “much harder” after they were forced to raise interest rates again. He said that Rishi Sunak placed “really quite substantial tax rises” on the public before the cost of living crisis took full hold in order “to build a war chest for pre-election tax cuts” in the coming years.
Mr Balls said: “There’s lots of talk about the last budget, what Rishi did or did not give away. The reality is, last autumn he put in place really quite substantial tax rises.
“Not just a national insurance rise but the freezing of the purse allowance year by year by year.
“I think he was trying to be prudent. I think he was also trying to build a war chest for pre-election tax cuts.
“But as of today, here and now, this is not the right time to have a big, tight fiscal squeeze in the economy.
“That’s making the Bank of England’s job much harder and I think this is pretty risky. I fear this is fiscal policy which is going to push us into a recession.
“So I think the chancellor needs to come back and not just look at whether he can help individual groups here or there, that’s the current debate, but instead ask himself the question of ‘Is this the right fiscal strategy for our economy at this time’.”
Sir Keir Starmer said Monday there were a “range of things” that could help alleviate the cost of living crisis and further criticised the Tories for their “dithering and delaying”.
Speaking on the debate on a windfall tax, he said: “It is a simple solution which could be voted through Parliament very easily.
It’s Labour’s plan, we’ll vote for it if the Government brings it forward, but dithering and delaying is the thing that’s stopping people getting that money to help them with their bills. £600 for those who would need it most would make a huge, huge difference.”
Boris Johnson, however, said he was opposed “intrinsically to new taxes” as he faced renewed calls for more Government intervention.
He said: “No option is off the table, let’s be absolutely clear about that. I’m not attracted, intrinsically, to new taxes.
“But as I have said throughout, we have got to do what we can, and we will, to look after people through the aftershocks of Covid, through the current pressures on energy prices that we are seeing post-Covid and with what’s going on in Russia and we are going to put our arms round people, just as we did during the pandemic.”
He added there was “more that we are going to do” but “you’ll just have to wait a little bit longer”.
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And chief secretary to the Treasury Simon Clarke said this morning that the Government will not “rush into action” over the crisis, though he suggested that Mr Sunak was addressing the issue “with real urgency and intent”.
He said: “We obviously recognise that we are in a situation which is fast developing and we want to make sure that we are supporting people ahead of what will likely be a challenging autumn and winter ahead.
“I’m not going to set a specific timetable for that, but the Chancellor is clear that we are looking at the situation with real urgency and intent.
“And it is against this backdrop that people can be reassured that the Government is on the case.
“We are not going to rush into action, but at the same time nor are we going to sit here and not provide the support that is needed given the severity of the situation.”
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