Budget gossip and U-turns to blame for Britain’s weak growth, former Bank of England economist warns Reeves
The Bank of England’s former chief economist has warned that weaker-than-expected economic growth figures are partly due to budget speculation as concerns about tax rises hit business and consumer spending negatively.
Andy Haldane, the Bank’s chief economist until 2021, told Sky News’ Mornings With Ridge And Frost that the pre-Budget restructuring was a “circus” and called for an overhaul of the process to prevent leaks that could damage the economy.
This follows official figures last week which revealed economic growth slowed to 0.1 per cent in the third quarter from 0.3 per cent in the previous three months, worse than most economists had predicted.
Chancellor Rachel Reeves blamed poor performance on Jaguar Land Rover’s production halt following cyber attack; Gross domestic product (GDP) fell by 0.1 percent in September after this attack affected activity in the manufacturing sector.
But Mr Haldane said the Budget rumors had “no doubt” had a direct impact on growth.
He told Sky News the upcoming Budget was “a real circus that’s been in town for months”.
He said: “It caused businesses and consumers to pull back.
“One of the reasons why we had a very weak growth figure last week was that Budget speculation reduced people’s willingness to spend.
“And above all, we need to stop these speculations.”
He added: “If you talk to businesses, if you talk to consumers, their fear of where the ax is going to fall is causing them to save rather than spend and not work their balance sheets.
“And that took the legs out from under the growth in the economy.”
He called on the Treasury to “decisively put an end to this speculation, this harmful speculation that is hindering growth.”
Mr Haldane said: “We speculate almost every day about the next tax rise.
“And we need to redesign that process to either make it watertight, like the Bank of England’s monetary policy decisions, or to have truly open consultation.
“We are now faced with a house of leaks and speculation that is doing absolutely no good to anyone. Least of all the economy.”
As for her performance so far, Mr. Haldane said Ms. Reeves had been “dealt with a bad hand, actually played quite badly.”
The Treasury was contacted to get an opinion on the issue.
