Bank of England rate rise and Rishi Sunak’s taxes ‘will sink the economy’

Another interest rate rise by the Bank of England at midday will accelerate the UK on a course which will sink the economy, Reform UK’s Richard Tice has warned today.

With interest rates expected to go up, Mr Tice has made a presentation revealing that the UK is heading like the Titanic to an iceberg which will sink the economy.

He blamed record public spending which is at 47 percent of GDP compared to 35 percent before the pandemic fuelling high taxes and interest rates.

Mr Tice warned: “It is not sustainable to raise government spending by a third, it means the Government has to raise taxes to service its debt and the Bank of England has to raise interest rates to sell the debt.”

The Reform UK leader branded the current economic plan “Rishi’s socialist solution” and has suggested that the country needs something similar to what Liz Truss proposed last year in “going for growth”.

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Mr Tice accepted that Ms Truss “had dropped the ball” on growth policies but that did not mean they were wrong.

He warned that Mr Sunak had made the “classic mistakes of socialism” by raising personal and corporate taxes along with public spending and “creating a subsidy culture”.

The businessman-turned-politician argued this has created lower growth and disincentivised people from going to work with 8.7 million of working age currently economically inactive despite a huge number of vacancies.

He insisted that instead of more interest rate rises this morning there should be a program of cuts pointing out that even a 5 percent cut in spending saves £60 billion per year.

He also called for the government to stop pay voluntary interest payments of £30 to £40billion a year on Bank of England reserves.

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Mr Tice also believes another £50billion can be saved by scrapping the High Speed 2 rail scheme which has been severely criticised by an official report last month.

And he pointed out that making another million people work and taking them off out-of-work benefits would save £15billion.

His proposed measures included “making work pay” by removing income tax below £20,000 of earnings saving people £1,485 a year.

He called for VAT to be reduced to 18 percent from 20 percent, fuel duty cut by 20p per litre, scrap environmental levies and end VAT on fuel which on average collectively would save a household £860 a year.

He also wants corporation tax to be brought back from 25p in the £1 to 19p again to attract businesses and investment to the UK.

He estimates this would boost growth by more than 0.5 percent a year and reduce inflation by 4 percent.

Mr Tice said: “We cannot keep on the current path or we will hit the economic iceberg that is waiting for us and the economy will sink.

“We need to go for growth and start thinking differently.”

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