The mini-budget unveiled by the Chancellor last week will pile on higher debt interest but only grow the economy by 0.1% each year until 2027, experts have warned. New research by the Tony Blair Institute for Global Change (TBI) and Oxford Economics claims the economy will only be 0.4% larger by 2027 than it would have been without the tax cut package.
It comes after days of market turmoil as traders swallowed the impact of the Kwasi Kwarteng’s growth plan, which included £45 billion of tax cuts. On Monday, the pound sank to a record low while yields on government bonds, known as gilts, surged amid concerns over the potential impact of the new Government’s policies on borrowing.
On Wednesday, the Bank of England launched an emergency UK government bond-buying programme to prevent borrowing costs from spiralling out of control. The new research comes after the Government refused to let the Office for Budget Responsibility issue forecasts linked to the mini-budget, although the Chancellor has since confirmed the OBR will publish full projections by November.
