Former Bank of England governor warns tax cuts plan means higher costs 'for everybody'

Sir Mark Carney
Sir Mark Carney

FORMER Bank of England governor Sir Mark Carney has said the Government has effectively under-cut the central bank's efforts to rein in rocketing inflation.

Sir Mark, who led the institution before current governor Andrew Bailey,  said that the Government's mini-budget announcements of £45 billion in tax cuts, without any credible plan to get borrowing back on a sustainable footing, was "working at cross-purposes with the bank" and has caused a "dramatic" turn in financial markets.

Sir Mark told the BBC: "Unfortunately having a partial budget, in these circumstances - tough global economy, tough financial market position, working at cross-purposes with the bank - has led to quite dramatic moves in financial markets."

He said: "The message of financial markets is that there is a limit to unfunded spending and unfunded tax-cuts in this environment, and the price of those is a much higher borrowing costs for the Government and for mortgage holders up and down the country and at some point those higher costs of borrowing for everybody undoes the positive impact of any tax reductions or shorter term growth measures."

Sir Mark - who was governor of the Bank for nearly seven years until March 2020 - said the absence of scrutiny of the Government's plans by the UK's independent forecasters, the Office for Budget Responsibility (OBR), has compounded the market woes.

He said: "There was an undercutting of some of the institutions that underpin the overall approach - so not having an OBR forecast is much-commented upon and the Government, I think, has accepted the need for that, but that was important."

Prime Minister Liz Truss said the mini-budget was the "right plan", while Chancellor Kwasi Kwarteng later made a public statement but neither responded directly to concerns raised in recent days across national and international financial institutions, including whether energy savings and tax benefits will be outweighed by other household costs.

An October date for the OBR report was later suggested.

Capricorn ditches Tullow in favour of Israeli tie-up

DIRECTORS at Edinburgh-based Capricorn Energy have struck a new merger deal with Israel's NewMed, ditching a previous agreement with Tullow Oil.

The new agreement will create a group focused on gas production in Israel and Egypt at a time when Europe is looking for non-Russian energy supplies. It will be listed in London under the NewMed name, and led by that company's chief executive Yossi Abu.

​Proserv energy services acquires stake in Synaptec

PROSERV, the Aberdeen-based energy services company, has acquired a stake in university spin-out Synaptec.

The company said it has taken a minority stake in the Glasgow-based power system monitoring firm, in a move that follows an earlier "strategic alliance" between the two.

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