'Economic chaos': Former Bank of England policy maker slams Chancellor's 'utterly incompetent' mini-budget
28 September 2022, 16:31 | Updated: 28 September 2022, 16:59
Professor of Economics Danny Blanchflower calls the Chancellor 'utterly incompetent'
Professor of Economics David 'Danny' Blanchflower, who formerly sat on the Bank of England's monetary policy committee, says Kwasi Kwarteng's management of the mini-budget has been 'utterly incompetent'.
After the Bank of England was forced to intervene with the UK's bond market in an attempt to stabilise the economy, James O'Brien spoke to Professor of Economics Danny Blanchflower.
Addressing The International Monetary Fund's disapproval of the mini-budget, the professor told James: "The idea that the IMF would come out and say 'stand up folks this is terrible' is beyond anything that I could think."
"I said at some point she [Liz Truss] is going to have to go from Mrs Stupid to Mrs Sensible and unfortunately we haven't seen Mrs Sensible," he stated.
James responded: "You and Rishi Sunak both completely understood what the consequences of this policy were going to be - why didn't they?"
Professor Danny Blanchflower admitted: "I don't know the answer to that."
He explained to James: "I wrote [to the government] and said something like you are going to arrive in No. 10 Downing street and the permanent Secretary of the Treasury is going to come over to you and explain to you the craziness you've been doing.
"Well what did they do? They fired him the second he came over."
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The former Bank of England policy maker explained how the government's plan reflects Laffer curve economics, a theory which often suggests that lower taxation creates increased government revenue.
"They [the government] don't even given us the numbers," he protested, "at the very least you have to say, here's what it is going to cost and here's the revenue stream."
Danny Blanchflower pointed to Kwasi Kwarteng's interview with BBC's Laura Kuenssberg the day after announcing the mini-budget, where he said "there's more to come": "Lots of people have called [it] a school boy error."
Danny Blanchflower said "It is utterly incompetent the way he managed it," suggesting his reaction to the the Chancellors mini-budget.
Scrutinising the mini-budget's longevity, he said: "They haven't got it through the House of Commons, are they actually going to be able to?"
"I never imagined we would be in economic chaos."
