The UK is now less like the US or Germany and more like ITALY OR GREECE to lenders, the ex-bank chief says, as he claims it’s “disingenuous” because British politicians claim economic turmoil is a “global phenomenon”.
- Former Central Bank Deputy Governor Sir Charles Bean spoke today
- Said it’s ‘disingenuous’ when ministers say market turmoil is ‘global phenomena’
- UK economy ‘doesn’t look like the US anymore, it looks more like Italy or Greece’
The UK economy now sits alongside Italy and Greece in risky bets for lenders and politicians are not being honest about the problems the nation is facing, a former Bank of England chief warned today.
Former central bank vice governor Sir Charles Bean said it was “disingenuous” for the government to say the market turmoil was “all a global phenomenon”.
He struck today after Jeremy Hunt replaced Kwasi Kwarteng as chancellor in a bid to calm panicked markets.
In the last three weeks since the mini-budget, there have been waves of turmoil, first in the sterling market and then in gilts.
Ministers have been keen to blame events such as the war in Ukraine for the problems, as well as the broader cost-of-living crisis and interest rate hikes affecting mortgages.
But Sir Charles told Sky’s Sophy Ridge on Sunday: “Frankly, I find it disingenuous to say it’s all a global phenomenon – it’s not.
“There is a global component, and if you look at the general level of interest rates, it’s up about three percentage points year-to-date.
Three quarters of that, two thirds maybe, is the world and what’s happening in Ukraine, but the rest of it is a British specific phenomenon and has evolved particularly since the mini-budget, so I think it’s clearly driven by that and Basically, we’ve gone from looking not too dissimilar like the US or Germany as a loan proposal to looking like Italy and Greece.’
The Mediterranean countries have long been considered the least stable in the EU, with Athens suffering from its own debt crisis in 2007/08, which led to the longest recession of any advanced economy on record.
Former central bank vice governor Sir Charles Bean said it was “disingenuous” for the government to say the market turmoil was “all a global phenomenon”.
It came as Mr Hunt spent the weekend reassuring markets that Britain was in sound economic shape.
He warned of major public spending cuts coming today but tried to reassure families there would be no return to the austerity years.
Amid claims the Tories are still planning to replace the prime minister, Mr Hunt is expected to continue her hike on Friday to raise corporate tax by raising the mini-budget plan to raise the property tax rate by 1p Lowering 19 pence crosses out.
Within a day of taking the keys to #11, the new Chancellor’s actions mean that none of the three main strands of the “Trussonomics” package remain from just three weeks ago. Alongside Friday’s corporate tax inversion – which will now rise from 19 per cent to 25 per cent – the decision to scrap the 45p income tax rate for the highest earners was embarrassingly reversed during the Conservative Party conference.
Speaking to BBC One on Sunday with Laura Kuenssberg, Mr Hunt said he wanted to keep as many of Liz Truss’ tax cuts as possible, but all options remain open.
He told Luara Künssberg on Sunday that “the prime minister is in charge,” saying: “We’re going to have to make some very difficult decisions, both on spending and on taxes. Spending won’t go up as much as people hoped…taxes won’t go down as fast as people thought and some taxes will go up,” he said.
And he also said no government department would be immune to “efficiency cuts” as he announced forthcoming spending cuts.
Asked if it was a return to the austerity measures introduced by the coalition in 2010, he said: “I don’t think we’re going to have anything like that this time.”
The chancellor, who also met with Treasury officials on Saturday, had previously insisted he and the prime minister were a “team” – but said she and sacked former chancellor Kwasi Kwarteng were “going too far” with their mini-budget gone too fast.
Some MPs backed the Prime Minister to go ahead today, saying a change in policy was needed more than a change in leader. But others suggested Hunt’s appointment and decisions could be the final nail in the coffin of Ms Truss’ short tenure.
Conservative MP Robert Halfon stopped urging Liz Truss to step down as Prime Minister but launched an extraordinary attack on her government when he called for a “dramatic reset” in the coming days.
Speaking on Sky News’ Sophy Ridge on Sunday, Mr Halfon said: “I’m concerned that in recent weeks the government has been looking like libertarian jihadists and treating the whole country as some kind of laboratory mouse to be ultra, ultra free can carry out market experiments.
“And here is not the land. It was one horror story after another.’
