British Chancellor of the Exchequer Jeremy Hunt blamed Brexit for a period of political instability that lasts for more than five years and is a factor that caused a decrease in investor confidence in the United Kingdom.
Mr. Hunt is currently seeking to defend a proposal for tax cuts, paid for by austerity in the public sector, to boost economic growth in the UK. He notes that the results of the referendum on Great Britain’s withdrawal from the EU in 2016 provoked a political split and became a driving force for change. After that, the situation, which was not characterized by sustainability and stability, according to him, worsened against the background of the outbreak of the coronavirus pandemic, increasing turbulence in the government.
At an event organized by the Resolution Foundation thinktank and the London School of Economics’ Centre for Economic Performance (CEP), Jeremy Hunt, in response to a question about the impact of the political situation on the damage to business investment, said that in this case there are very specific reasons that led to a negative state of affairs. In this context, he drew attention to Brexit. According to him, this process has led the country to a very difficult period in the political system. He noted that the British supported the idea of leaving the EU, but the government could not come to an agreement on this issue, which caused the fall of Theresa May’s government, after which the United Kingdom faced a new challenge in the form of the coronavirus pandemic.
Jeremy Hunt’s comments came after researchers at the Institute for Public Policy Research (IPPR) thinktank said more than a decade of fraud involving nine business secretaries, seven chancellors, and eleven different economic strategies had damaged the flow of investment into British business.
The chancellor said that the government of the current British Prime Minister Rishi Sunak was able to stabilize the economic situation in the country after the crisis provoked by last year’s Liz Truss mini-budget. Mr. Hunt also expressed hope that the level of stability will increase in the future.
The chancellor was speaking at the presentation of the final report of the Resolution Foundation and CEP on the study of the economy until 2030, which concludes that British workers are underpaid 10,700 pounds a year after 15 years of relative decline in the global area. Commenting on this information, Jeremy Hunt said that his proposal to reduce taxes for workers and businesses by 20 billion pounds could accelerate economic growth as a result of filling vacancies in the labor market and encouraging companies to invest.
Answering the question that the mentioned plans provide for a reduction in the volume of financing of the public sector in real terms, the chancellor said that for him the priority is economic growth to increase tax revenues to the treasury. He described his proposal as a measure of stimulating growth. Jeremy Hunt also stated that being a conservative, he would like to reduce the size of the state as a proportion of GDP.
The chancellor called on Labour to fulfill their promise to balance public spending by reducing the United Kingdom’s public debt as a share of the economy. He also stated that it is impossible to fulfill the budget rule to reduce debt in five years and increase the amount of borrowing by 28 billion pounds per year for five years.
During a speech at the same event, the leader of the Labor Party, Keir Starmer, said that the decisions that the current government is making, especially their results over the past 13 years, will limit what the future government of a political force, which he is a representative of, can do. This statement was made after Jeremy Hunt’s comments. Currently, some senior Labour MPs believe that their party’s leader is preparing to implement an austerity-style public sector reduction strategy.
Keir Starmer also said that those who expect the new Labour government to quickly turn on the spending taps will be disappointed. Separately, he noted that representatives of the party he leads will be ruthless in dealing with the issue of spending every pound sterling.
As we have reported earlier, Bank of England Governor Resists UK Rate Cuts for Foreseeable Future.