Tax and Fiscal Policy

Grim OECD forecast further evidences the need for a supply-side revolution

Matthew Lesh writes in The Express

IEA Head of Public Policy Matthew Lesh has written for The Daily Express responding to OECD figures projecting that the UK’s economy is set to contract by 0.4% in 2023.

Matthew wrote:

“despite the tendency by many to blame these external factors, the OECD found that more than half of the UK’s current inflation comes from the demand side. This means the Bank of England’s excessively loose monetary policy in recent years, the hundreds of billions of pounds of quantitative easing that resulted in too much money chasing too few years.

The OECD also highlights the negative impact of the “untargeted” Energy Price Guarantee, the price freeze announced by the Truss government in September.”

Matthew emphasised the need for substantial supply-side reform, writing:

“these forecasts add to a growing body of evidence showing the desperate need for economic reform to boost Britain’s economic potential. Economic shocks may explain the current slowdown, but there are significant underlying factors behind the UK’s slow growth over recent decades.

We must not accept the OBR’s conclusion that real incomes will be below pre-Covid levels for the next five years.”

You can read Matthew’s full article here.