Does the Prime Minister have a plan for economic growth?
According to the former chief economist of the Bank of England, Rishi Sunak is allowing pessimism to hold back economic recovery in the UK.
Andy Haldane, now chief executive of the Royal Society of Arts, claimed that the Prime Minister’s reluctance to reveal a plan for boosting the economy is stopping businesses from investing.
At the same time, Haldane said that Labour also fails to provide a clear economic plan.
Speaking to the BBC, Haldane said:
“As things stand it is not really a growth programme at all.
“We are currently short that piece of the jigsaw puzzle. Which is, what is the plan that is going to boost growth over the medium term?
“There were hints of it from the Prime Minister’s speech earlier in the week. And indeed from the leader of the opposition. That is still falling somewhat short of that plan.”
Since taking office, Rishi Sunak and his Chancellor Jeremy Hunt have worked to reverse the earlier economic reforms introduced by predecessors Liz Truss and Kwasi Kwarteng.
Former Prime Minister Truss aimed criticism at the so-called “anti-growth coalition”, consisting of establishment figures comfortable with maintaining the status quo. She ultimately lost the office of Prime Minister when financial markets rejected her significant tax-cutting plans.
The current government has switched its focus to restoring economic credibility.
However, Andy Haldane believes that UK businesses are holding back investment plans due to the bleak economic outlook, with no clear government plan for turning the economy around in 2023.
He said: “Stabilising the ship was absolutely the priority at the end of last year. But this is the year where optimism and innovation and investment will only happen if we have some sense of a brighter economy for tomorrow.
“That’s the main reason. why businesses are holding back on investing right now. That’s why the plan really matters to be put in place today with expectations of improvement for tomorrow.”
Despite this negativity about the short-term, Andy Haldane appears to be optimistic about the latter part of the year, adding:
“Last year I started with hope and ended with despair. This year kicks off with despair, and I’m hopeful we might have a hope by the end of the year.
“I think [inflation] has peaked in headline terms already. So this will be the year when inflation falls off if for no other reason that last year’s energy price rises will drop out of the annual comparison.”
“Nonetheless, underlying here is a very tight labour market. Lots of unfilled vacancies that are putting upwards pressure on pay. And that for me will lead to inflation staying above its 2pc target for some little while yet.”
Responding to the comments, a Treasury spokesperson said:
“High inflation driven by Putin’s invasion of Ukraine is slowing economic growth across the world. No country is immune.
“To get the British economy back on track, we have a plan that will help to halve inflation this year while laying the foundations for long-term growth through record investment in infrastructure and new industries.
“We have already shown how we will use our freedom outside the EU to unlock over £100 billion of private investment and create the best regulated economy in the world – promoting innovation in key growth sectors, such as digital technology and the life sciences, so that future Silicon Valleys are based here in the UK.”
