The unwinding of @budget2020 continues. The situation demands the whole package to go, not just bits here & there. The creeping U-turn just encourages MPs & others to demand more. And it is unlikely that the markets will respond well to the uncertainty created by slow change.
Will the reversal of the Corporation Tax reduction effect growth? This question is difficult to answer because it involves comparing anticipation in 3 periods, before @budget2022, up until now, & after the reversion.
However, what stands out is the volatility of policymaking, which damages govt credibility & is likely to lower expectations for investment and lower economic growth.
The original ⬆️ in Corporation Tax was unlikely to have much effect on growth: 1. The rise merely brings the UK into line with other OECD economies. 2. Evidence on the relationship between the tax & growth is mixed. 3. Any growth that might result will not be green growth.
#TheGrowthPlan, which is yet to be disclosed in detail, is holed below the water already. The govt incompetence has damaged investor confidence, weakened likely investment growth, & therefore reduced economic growth. #PostTruthEconomics
Natural tranquility in Scotland
The Whitehall farce continues. While I was away in Scotland, the #TheGrowthPlan & #budget2022 continue to be shredded by expectations of market turmoil tomorrow. Hunt as a new Chancellor, but also the shadow PM? One item after another scrapped from the budget. New fiscal rules?
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