The mini-budget unveiled by the chancellor last week will pile on high debt interest but grow the economy by only 0.1% every year until 2027, experts have warned.
New research from the Tony Blair Institute for Global Change (TBI) and Oxford Economics claims the economy will be only 0.4% bigger by 2027 than it would have been without the tax cut package.
It comes after days of market turmoil as traders swallowed the impact of Quasi Quarteng’s growth plan, which included a £45bn tax cut.
Government’s growth plan is all pain, little gain for the UK taxpayer and our economy
On Monday, the pound fell to a record low, while yields on government bonds, known as gilts, rose amid concerns over the potential impact of the new government’s policies on borrowing.
On Wednesday, the Bank of England launched an emergency UK government bond-buying program to prevent borrowing costs from spiraling out of control.
The new research comes as the government declined to release mini-budget-linked forecasts to the Office for Budget Responsibility, although the chancellor has confirmed that the OBR will publish full estimates by November.
TBI said its forecast shows that the chancellor’s plans “fall well short of the VC’s stated target, set at around 1.7% per annum, to boost growth to 2.5% from the OBR’s previous assessment.” has been”.
It also highlighted significant pressure from loan interest costs over the coming five years.
TBI Chief Economist Ian Mulhern said: “The direct costs of the tax cuts will add £169 billion over the next five years, but by raising interest rates much higher than they are, taxes will also pile up cheaper debt interest for the government over the same period.” £82 billion in cost.
“This additional loan interest alone is almost twice the cost of the entire HS2 rail project.
“Clearly, our forecast shows that the government’s growth plan is all pain, with little benefit to the UK taxpayer and our economy.”
Credit: www.standard.co.uk /