Monetary Policy

Rishi Sunak can look to Margaret Thatcher for inflation policy inspiration



Christopher Snowdon quoted in The Sunday Express

Alex Morton writes in CapX

IEA Director of Strategy Alex Morton wrote in CapX discussing what Rishi Sunak can learn from Margaret Thatcher about taming inflation.

“The argument goes that Sunak is copying Thatcher’s approach by refusing to cut taxes, because to do so would slow the planned reduction in the deficit and allow higher inflation.

“Is that really the case though?

“The problem is that the current approach does not copy Mrs Thatcher’s. The fiscal consolidation Thatcher undertook was much less extreme than the proposed current fiscal squeeze. Thatcher from 1979 cut some taxes but raised others, and spent more on some areas but cut others. The best overall fiscal measure for her approach is therefore the deficit overall.”

The full article can be read here.