Liz Truss’s High-Wire Plan Could Actually Avert a UK Recession
But while an energy price cap plus supply-side tax cuts would prop up demand, it’s also likely to drive up interest rates above 3%.
Ready to spend.
Photographer: Hollie Adams/BloombergLiz Truss kept the economic policy pronouncements vague during her leadership campaign and first speech as UK prime minister, but she did set out some principles that will dictate her approach economic policy making: She plans to cut taxes, dislikes “handouts,” and will unleash supply-side reforms to drive growth. Oh, and she’ll also support the ailing National Health Service and increase defense spending.
So far, so Thatcherite — or rather Reaganite. But in the current economic climate, her thinking has been characterized as “fantasy economics.” I spoke with Bloomberg Economics Senior UK Economist Dan Hanson about what’s real and what’s fantasy in the options available to Truss.