The Express, July 21, Professor Patrick Minford
The latest is by Citibank economists, who follow similar attacks by the Economist and of course implicitly the Treasury itself. In brief, the Truss programme is to reverse the rise in corporation tax and NICs to prevent damage to the economy’s supply, and to suspend the green levy to mitigate the energy crisis. She also proposes a review of the Bank of England’s mandate, which indeed is overdue since it was originally set over 20 years ago.
The focus of the critics is on the ‘pro-cyclicality’ of the tax programme, which they argue will boost inflation just as we need to be taming it; another argument is that it will create an unsustainable rise in debt. They also think the Bank’s mandate is above review – in this of course they are joined by the Bank.
But note that Liz Truss has not proposed any overthrow of Bank monetary independence, but just a review of its workings, to ensure that monetary policy does not repeat the recent mistakes that have allowed inflation to get to double digits.
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