LIZ Truss’s economics guru Patrick Minford has trashed Rishi Sunak’s proposed policies as “absurd” and a “second project fear”.
In an exclusive interview with GB News’ economics editor Liam Halligan, he said: “I think Rishi Sunak just completely failed to understand what modern research is telling us.
“And this whole Treasury orthodoxy is really a sort of harking back to a fearful past where there was no confidence in the possibility of Britain running its affairs efficiently and generating growth.
“Of course, if you go back to the 1980s, we had quite successful growth policies and a lot of supply side reforms and that was a period of great success in the economy. I think that since then we’ve slid away from a lot of that”.
He added: “I mean, regulation has become much more intrusive, thanks to the EU mainly, and taxes have been allowed to get higher and higher with marginal tax rates that are quite dangerously high levels, culminating in…suggesting the corporation tax should go up to 25%.
“That is completely absurd and highly damaging since one of the key places we’re going to get growth from is innovation by businesses and if you put a big tax on that, you’re going to reduce the rate of productivity growth.
“And so I think that this is a second project fear coming out of the Treasury that has no basis in research or the way in which markets actually work”.
Asked about Liz Truss’ policies, he said: “The main objective of her economic policy is to maximise the welfare of the ordinary citizen and that means putting growth first and we know from an awful lot of research, including work we’ve done on the UK economy, that the tax system has a big effect on growth.
“It’s the so-called endogenous growth. I mean, growth actually results from good policies and good institutions and so one of the things that you’ve got to get right is the tax system.
“Liz Truss’s program is going to get the tax system back on track as a pro growth mechanism.”
He added: “The Treasury’s short-term rules have actually been preventing good tax policies and what Liz Trust is proposing is to is to get the tax policies right for growth, which is what maximises the welfare of the ordinary citizen, and then make sure that the debt ratio is coming down in the long term by by fitting state spending to our available tax revenues as they come in.
“If we do produce more growth, of course it’s impossible to know how much extra growth we will produce, but we will definitely produce some, that will improve the tax revenues and will mean that we shouldn’t have too bad a problem in terms of our state spending.
“That’s also necessary for the long term future of the economy.”
