Treasury watchdog to ask Kwarteng to hand over growth forecasts
Kwasi Kwarteng will be called before parliament’s Treasury watchdog and asked to hand over independent growth forecasts, as its chairman said there is “not a very broad path” out of the current economic situation.
Mel Stride, a Conservative MP and chair of the Treasury committee, said Kwarteng was “very, very unlikely to reverse” the £45bn of unfunded permanent tax cuts he announced last Friday, even though that is an option. The alternative, he said, was to act quickly to “demonstrate to the markets that growth is realistic”. The third option would be deep cuts to public spending, but that would be difficult given the current pressure of inflation, Stride said.
“Potentially there is a path, but it’s not a very broad path, and there is a lot of work to be done. And I have to say this is a huge challenge,” he said in an interview with the Guardian.
Stride said setting out supply-side reforms would be crucial, and identified increasing immigration as the quickest way of boosting growth sustainably. He said: “We need to hear a lot from the government about how they are going to do things in the City and with regulation, infrastructure … to try to boost growth up to this trend level of 2.5%. Part of the problem with pulling those levers is that they take time to kick in. The one that interestingly would bite rather more quickly than the others would be immigration.”
Kwarteng is under increasing pressure over Friday’s fiscal event, which has led to a plunging pound and emergency action from the Bank of England to shore up the gilt market with £65bn.
Many Conservative MPs are furious at the situation and some think the chancellor should resign. But Stride, who was keen to be measured in his response, said this was not the time for
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