Challenges remain for the new Prime Minister

Julian Jessop writes for iNews

IEA Economics Fellow Julian Jessop has written for iNews welcoming the prospect of greater stability under new Prime Minister Rishi Sunak, but warning that he still faces significant economic challenges.

Outlining these challenges, Julian wrote:

“The first and most immediate is to support households and businesses through the winter and beyond, as the UK joins other major economies in recession. This suggests that fiscal policy should be geared towards boosting incomes and confidence,”

“The second challenge is to come up with a credible medium-term plan to fill in whatever “black hole” the Office for Budget Responsibility (OBR) now finds in the public finances.”

Julian warned that returning to economic orthodoxy would have downsides:

“It is now widely assumed that the fiscal gap can only be closed by tax increases and spending cuts, which in turn will add to the downside risks to the economy. Indeed, this could see a quick return to the old “doom loop” of higher taxes, lower spending, weaker growth”

The full article can be read here.