As her chancellor prepares to announce a mini-Budget, the PM has pledged tax cuts to boost growth.
With the death of Queen Elizabeth II, Liz Truss has faced an unprecedented challenge in her first month in the job.On Friday, the Chancellor, Kwasi Kwarteng, will outline a mini-Budget to deliver promises made by Ms Truss during her Tory leadership campaign to cut taxes.
And on average, we have been underperforming against major economies over the past 15 years, while income inequality has widened.All change? Cutting taxes marks a definitive break from the Conservative's austerity era. But many economists query if that will substantially revive growth. Analysts at Oxford Economics, using a model that mimics that of the Treasury, say that they would add just 0.1% to the level of output of GDP by 2025. History says tax cuts rarely pay for themselves.
And rising income inequality could pose electoral challenges. One think tank claims those on the lowest incomes in the UK are around a fifth worse off than their French counterparts.Slashing red tape, meanwhile, is a more familiar refrain but there are questions about what might be feasible or desirable.
But what most economists do agree on is that underinvestment has been holding the UK back, making us a less efficient nation and restraining wage growth.Some, including Karen Ward, who was adviser to Philip Hammond when he was Chancellor, says the decline in investment became particularly marked from the time of the 2016 referendum as businesses waited to see how Brexit panned out.
But, the Bank of England suggests, it's too late to avoid a recession, although its length and depth could be less severe.The package also risks adding even more to the government's debt than the furlough scheme. As it is, higher inflation already risks the interest payments on that debt exceeding £100bn next year.
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