On Thursday, as the two candidates for Britain’s next prime minister argued the Bank of England’s predictions of a protracted recession, former finance minister Rishi Sunak and British foreign minister Liz Truss got into an argument about the country’s economic destiny.
To obtain the support of the 200,000 Conservative Party members who will, by September 5, elect a successor to Boris Johnson, who was forced to leave due to a string of scandals, Truss must defeat Sunak.
British households’ budgets are being squeezed by inflation brought on by rising energy prices, according to a statement from the Bank of England on Thursday. In a month, Truss or Sunak will be responsible for handling the economic problem.
The front-runner in the race for the presidency, Truss, asserted that tax reductions can alter the central bank’s forecast. According to her, the decision by the government to increase taxes to their greatest level since the 1950s is what is to blame for causing the country to enter a recession.
In a televised discussion, Truss stated, ‘We can affect the outcome and we can increase the likelihood that the economy grows.’
‘You can’t just tax your way to growth, folks. The taxes we currently have, which are at a 70-year high, are likely to cause a recession, I’m afraid.’
As finance minister, Sunak oversaw the implementation of tax increases to help Britons pay for rising energy prices as well as government assistance provided during the COVID-19 pandemic. Many activists in the historically low-tax party have criticised that.
Sunak claimed that the anticipated spike in inflation confirmed his belief that it would be irresponsible for Truss to raise borrowing and cut taxes at this time.
The lights on the economy are flashing red, and the primary cause is inflation, he said. ‘We in the Conservative Party need to get real and fast,’ he said.
Sunak promised to gradually reduce taxes in place of Truss’ plan, which he claimed would increase inflation.
He stated, ‘Now I am afraid Liz Truss’s initiatives may make the problem worse.’
‘All of us, all of you, will experience increased mortgage rates, savings and pensions that are depleted, and suffering for millions if we simply continue to feed the inflation cycle. That is not what I want for you.’