30 SEPTEMBER 2022 | NEWS
An economic watchdog has met with the Prime Minister today to discuss the Government’s economic plans amid fears of economic crisis.
The Office for Budget Responsibility met with the new Prime Minister, Liz Truss, and her Chancellor of the Exchequer, Kwasi Kwarteng, to discuss the state of the economy following last Friday’s ‘mini-budget’, which unveiled the sweeping tax cuts that had largely been announced in the new Prime Minister’s leadership campaign.
The Prime Minister and the Chancellor met the Chair of the Office for Budget Responsibility, Richard Hughes, in a half-hour meeting.
A statement from the Office for Budget Responsibility subsequently announced that the topic discussed during the meeting was the “economic and fiscal outlook” and pledged to provide forecasts for the Chancellor next Friday. They said in the statement: “We discussed the economic and fiscal outlook, and the forecast we are preparing for the Chancellor’s medium-term fiscal plan.
“We will deliver the first iteration of that forecast to the Chancellor on Friday October 7 and will set out the full timetable up to November 23 next week.
“The forecast will, as always, be based on our independent judgement about economic and fiscal prospects, and the impact of the Government’s policies.”
The Treasury also released a statement following the meeting, saying: “This morning, the Prime Minister, Liz Truss, and Chancellor Kwasi Kwarteng met with the OBR’s Budget Responsibility Committee, including the Chair, Richard Hughes, at No 10 Downing Street.
“They discussed the process for the upcoming economic and fiscal forecast, which will be published on 23 November, and the economic and fiscal outlook.
“They agreed, as is usual, to work closely together throughout the forecast process and beyond. The Prime Minister and Chancellor reaffirmed their commitment to the independent OBR and made clear that they value its scrutiny.”
Earlier in the morning, Mel Stride, the Conservative MP who heads the cross-party Treasury Select Committee, speculated that the Office for Budget Responsibility would inform the pair that their plan “just isn’t feasible”.
Ms Stride told BBC Radio 4’s Today Programme: “This begs the big question as to what the OBR will be saying to the Prime Minister and the Chancellor in this meeting today.
“But I suspect strongly that it will be that this circle cannot be squared.
“You can’t come forward with multiple billions of unfunded tax cuts in a high-inflationary environment with a very tight labour market and expect – along with various supply-side changes – to develop the growth that’s going to pay for those tax cuts. That just isn’t feasible.”
In the ‘mini-budget’ last Friday, Mr Kwarteng announced several policies aimed at growing the economy. These included cancelling the planned corporation tax rise to 25% and maintain it at 19%. Additionally, the basic rate of income tax is set to be cut to 19p from the next fiscal year, and the highest 45p personal tax band was scrapped altogether.
Other polices announced in the ‘mini-budget’ included creating new investment zones in areas such as the West Midlands and Tees Valley, with the Chancellor announcing further deregulation for infrastructure and housing projects.
The Government is also planning to scrap VAT on shopping for tourists coming to the UK, and will be freezing alcohol duty.
