The head of Britain’s leading independent economic think tank has launched a stinging attack on Rachel Reeves, singling out tax rises in her Budget as ‘ludicrous.’
Paul Johnson, head of the highly influential Institute for Fiscal Studies (IFS), said his head ‘literally hit the table’ when the Chancellor announced a rise in stamp duty and the freeze on winter fuel duty.
Johnson and the IFS are respected by politicians on all sides for their impartiality and the quality of their analysis.
He was this weekend described as ‘Westminster’s fiscal referee’ and ‘the thinking person’s fiscal crumpet’ in an acknowledgement of the unique role he plays in Britain’s political system, analysing the Budget and cutting through any ‘spin’.
All politicians are eager for his approval so his outspoken comments on the Budget will hit Reeves hard.
‘I did not forsee the rise in employer national insurance contributions, ‘ he told the Times in an interview. ‘I understood the manifesto to rule it out.’
Johnson added that stamp duty tax is the most ‘damaging tax we have’ and warned that increasing it would only make ‘things even more immobile and increase rents even further.’
The chancellor’s decision against increasing fuel duties was ‘ludicrous,’ he said.
Paul Johnson, the head of the respected Institute for Fiscal Studies (IFS) said his head ‘literally hit the table’ after Rachel Reeves’ ‘ludicrous’ Budget
Reeves was this weekend blamed for talking down the economy as fresh figures revealed growth had slowed to a crawl.
The data from the Office of National Statistics showed gross domestic product grew by just 0.1 per cent in the three months to the end of September.
Critics blamed the Chancellor for the slowdown during her first three months in office, saying she had talked down the economy, leaving businesses and households hesitant to spend.
On taking power the Chancellor repeatedly insisted that the economic inheritance from the Tories was the worst for any new government since the Second World War.
Business groups warned Reeves is set to make things even worse after her move to hike employers’ national insurance contributions in the Budget. That will raise £25bn and could cost 100,000 jobs, analysts predict.
Critics blamed the Chancellor for the slowdown during her first three months in office, saying she had talked down the economy
Shadow Chancellor Mel Stride said: ‘I’m afraid they’re reaping to a degree what they’ve done in terms of talking the economy down.
‘And of course now what they’ve done is follow it up with a Budget that has ramped up taxes, particularly taxes that are going to bear down on growth.’
Johnson is also sceptical about the long-term strength of the UK economy due to the ageing population which he says is the biggest issue facing the country.
He said: ‘Pensions, social care and health spending are all going to go up.
‘If we don’t want to tax or borrow even more, something else will have to go down. We need to decide what.’