Key Highlights
- Former Bank of England rate setter, Andy Haldane, criticizes the government for “repeated mistakes” that have harmed the economy ahead of Budget 2025.
- Haldane argues there needs to be new rules to prevent economic self-harm and suggests speculation has caused businesses and consumers to fear spending.
- The Chancellor’s budget speech is set to take place next week, following a period of economic turmoil marked by high unemployment rates and weaker-than-forecast growth.
Ex-Bank Rate Setter Critiques Government’s Economic Policies
Former Bank of England rate setter Andy Haldane has criticized the government for its handling of public finances in an interview with Sky News, highlighting a series of “repeated mistakes” that have negatively impacted the economy. The comments come as the UK is set to face a critical budget event next week.
Economic Turmoil and Speculation
Speaking on Mornings with Ridge and Frost, Haldane pointed out that repeated economic missteps by the government have created an environment of fear among businesses and consumers, leading them to save rather than spend. He emphasized this was a significant problem, given the ongoing uncertainty surrounding tax policies and economic stability.
“The black hole narrative, which has been sucking all life or energy from the economy, has been repeated again,” Haldane said, referencing the persistent focus on public finances as a crisis. “There hasn’t been enough done to give growth a chance to create that stability.”
Chancellor’s Stewardship Under Scrutiny
The criticism extends to the Chancellor’s stewardship of economic policy over the past 16 months, which Haldane described as “a bad hand played, in truth, pretty poorly.” He argued that the process leading up to the budget has become too elongated and leaky, suggesting it needs a complete overhaul.
“We need to re-engineer this process,” Haldane stated. “Either make it watertight like the Bank of England’s monetary policy decisions or have an open consultation. Right now, we have leaks that serve no one, least of all the economy.”
Recent Economic Data
The latest economic data from the Office for National Statistics (ONS) has shown a concerning trend, with unemployment rising to 5% and economic growth slowing to 0.1%. Haldane highlighted these figures as indicative of the broader issues facing the economy.
“When you speak to businesses and consumers, their fear about where the axe will fall is causing them to save rather than spend,” he explained. “This has taken the legs from beneath growth in the economy.”
Government’s Response
The Chancellor faced another challenge last Friday when she ruled out a significant increase in income tax despite having prepared for it earlier this month. Treasury sources attributed the U-turn to better-than-expected economic forecasts by the Office for Budget Responsibility (OBR).
“It was right for the Chancellor to speak to the public on the principles she will take on delivering the budget and ensure stability in the public finances,” stated the Prime Minister’s official spokesman.
Expert Analysis
Haldane’s remarks reflect a growing concern among economists about the economic outlook for Budget 2025. His call for new rules to prevent self-harm highlights the need for transparency and stability in fiscal policy, which is crucial for maintaining investor confidence and fostering growth.
As the budget approaches, all eyes will be on the Chancellor’s ability to navigate these challenges and provide a roadmap for economic recovery and stability.
Stay tuned as we continue to cover this important event.
