UK economy now comparable to Greece and Italy thanks to Liz Truss, ex-Bank leader says
Lenders now view the UK economy as comparable to Greece and Italy thanks to Liz Truss’s turmoil, a former Bank of England leader has said.
Former deputy governor Sir Charles Bean said the UK is no longer on a par with stronger economies such as the US and Germany.
Sir Charles cited Truss and Kwasi Kwarteng’s disastrous “growth plan”, announced in the mini-budget 23 days ago, which caused major economic turmoil amid market concerns about the impact of the unfunded £43bn tax giveaway on public finances.
Since the mini-budget, Truss has repeatedly claimed global factors such as the Ukraine crisis are ultimately to blame for the UK’s economic chaos.
Sir Charles, though, dismissed this on Sky’s Sophy Ridge on Sunday programme.
“Frankly I think it’s disingenuous to say it’s all a global phenomenon,” he said. “It’s not.”
Watch: Timeline: Liz Truss’s turbulent time as prime minister
He made clear there is certainly a global element, with the general level of interest rates up 3% since the beginning of the year.
But he continued: “Three-quarters of that, two-thirds maybe, is the world and what's happening in the Ukraine - but the rest of it is a UK-specific phenomenon and it’s particularly developed since the mini-budget, so it’s clearly driven by that in my view.
“Basically we’ve moved from looking not too dissimilar from the US or Germany as a proposition to lend to, to looking more like Italy and Greece.”
With her government in crisis, Truss sacked Kwarteng on Friday, appointing Jeremy Hunt as his successor - the UK’s fourth different chancellor in four months.
Then, in a series of interviews on Saturday, Hunt effectively trashed the policies that brought Truss to power last month.
He is now putting together a new fiscal plan - effectively a full budget - for 31 October in an attempt to restore some order to Truss’s administration.
Read more: Jeremy Hunt refuses to say Liz Truss is a 'confident leader' who 'has a grip on country'
But Sir Charles warned: “It’s not simply just a case of changing the identity of the chancellor… it’s actually the contents and how the numbers add up.
“The crucial thing will be whatever is published in a couple of weeks’ time is coherent and the markets see there is a viable and plausible plan for making everything fit together.”
On Sunday, Hunt warned of “difficult decisions” and fresh “efficiency savings” for all departments, but declined to get into specifics about potential new cuts or what promises could be axed in a bid to save money.