Gerard Lyons, an external adviser to Prime Minister Liz Truss, said concerns at the Bank of England that cutting taxes could add to the UK’s inflation crisis are “utter rubbish.”
Truss came to power earlier this month promising to cast aside the orthodox thinking on economic policy, which she says has held the UK back for years. Chancellor of the Exchequer Kwasi Kwarteng is due to unveil a raft of tax cuts in his first major policy move on Friday morning.
The UK government’s plan to stimulate the economy raises “difficult” issues for the Bank of England as it tries to cut inflation from near its highest in 40 years, Jonathan Haskel, who sits on the BOE’s nine-member Monetary Policy Committee, said during a panel discussion in London Thursday.
“That’s complete and utter rubbish really quite frankly, and that should be knocked on head,” Lyons said Friday in an interview with Bloomberg Radio. “The Bank of England’s messaging is very bizarre. They have a self-made credibility gap.”
Lyons said the central bank is partly responsible for the UK’s inflation problem and that policy makers should acknowledge that government polices had already lowered the projected peak for inflation -- by subsidizing energy prices -- and averted the risk of a major recession which would have done serious damage to the public finances.
Read More: UK Fiscal Stimulus Will Be ‘Difficult’ for BOE, Haskel Says
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