Friday 23 September 2022 05:23 PM Martin Lewis brands statement 'staggering' as IEA hails 'boost up budget' trends now
Kwasi Kwarteng's 'mini-budget' received a mixed response from economy experts today, with some accusing him of a reckless 'gamble' but others hailing his 'bold and ambitious' vision.
Money Saving Expert Martin Lewis described it as 'staggering', adding: 'I really hope it works. I really worry what happens if it doesn't.'
The dramatic 'Emergency Budget' saw the biggest assault on the tax burden since 1972, the Chancellor abolished the 45p top rate for around 660,000 people earning over £150,000 - saving them an average of £10,000 a year each.
Millions of ordinary Britons will also keep hundred of pounds more after a 1p cut in the basic rate was brought forward to next April. Mr Kwarteng reversed the national insurance hike, as well as scrapping a huge planned increase in corporation tax from 19p to 25p and limits on City bonuses.
Stamp duty is being ditched for values up to £250,000, with first time buyers exempt up to £425,000 - taking 200,000 people out of the system altogether. Beer, wine and cider duty rises are being cancelled - and in an effort to bolster tourism overseas visitors will be able to shop VAT-free.
Mr Kwarteng stressed there was a long-term challenge in Britain that needed to be tackled. 'Growth is not as high as it should be,' he said. 'We are determined to break that cycle. We need a new approach for a new era.'
But unfortunately for the Chancellor not everyone agreed. Here is how some of Britain's most influential financial commentators have reacted.PAUL JOHNSON, director of the Institute for Fiscal Studies: 'Kwarteng is betting the house with his vast tax cuts'
Paul Johnson of the IFS said the 'mini budget' was a 'dramatic change in the direction of economic policy-making'
'The plan seems to be to borrow large sums at increasingly expensive rates, put government debt on an unsustainable rising path, and hope that we get better growth. This marks such a dramatic change in the direction of economic policy-making that some of the longer-serving cabinet ministers might be worried about getting whiplash.
'Mr Kwarteng has shown himself willing to gamble with fiscal sustainability in order to push through these huge tax cuts. He is willing to shrug off the risks of inflation, and to invite significantly higher interest rates. Injecting demand into this high-inflation economy leaves the government pulling in the exact opposite direction to the Bank of England, who are likely to raise rates in response.
'Early signs are that the markets - who will have to lend the money required to plug the gap in the government's fiscal plans - aren't impressed. This is worrying. Government borrowing is set on an upward path. It will reach its third-highest peak since the war, and remain at well over £100 billion, even once the energy support package is withdrawn.
'And we heard nothing on public spending. It seems almost inconceivable that plans made last year, when inflation was expected to peak around 3%, will not need topping up at some point, unless the government is willing to allow a (further) deterioration in the range and quality of public services.
'Presumably this Government would borrow for that also. Mr Kwarteng is not just gambling on a new strategy, he is betting the house.'MARTIN LEWIS, found of Money Saving Expert: 'This really was quite staggering'
'That really was quite a staggering statement from a Conservative party government. Huge new borrowing at the same time as cutting taxes.
'It's all aimed at growing the economy. I really hope it works. I really worry what happens if it doesn't.
Martin Lewis said he was 'really worried' about what would happen if Mr Kwarteng's plan did not work
'This isn't a trickle-down Budget, it's a boost-up Budget. The Government has announced a radical set of policies to increase Britain's prosperity – from cancelling the corporation tax rise, to cutting stamp duty and extending investment allowances.
'It's refreshing to hear a Chancellor talk passionately about the importance of economic growth and supply-side reforms, rather than rattling off a string of state spending pledges and higher taxes.
'Only by bearing down on the amount of tax the state collects across the income spectrum, and reducing the regulatory burden, can we create better conditions for growth.'
The IAE's Mark Littlewood said: 'It's refreshing to hear a Chancellor talk passionately about the importance of economic growth and supply-side reforms'
Robert Colvile, director at the Centre for Policy Studies, said: 'This is bold and ambitious'
'This Government has been bold and ambitious in pursuing a pro-growth agenda – not just for now, but over the long term.
'The challenge now is for the Government to ensure