Boris Johnson has indicated his government will not cut taxes until inflation is brought under control as it comes under renewed pressure to cut the amounts paid by households and businesses.
The PM has insisted he is cutting taxes ‘as fast as possible’ after Gerard Lyons, who advised him when he was mayor of London, called for income tax cuts and on companies.
Mr Lyons suggested that the latest figures showing a decline in the UK economy highlight the need for fiscal stimulus.
The Office for National Statistics (ONS) said gross domestic product (GDP), a measure of the size of the economy, fell 0.3% in April, following a 0.1% drop in March .
Mr Lyons, who was chosen by Mr Johnson as his chief economic adviser at City Hall, said: “The economy is losing momentum. It’s not just a cost of living crisis, but a weakening of growth that policy makers have to deal with.
“Given this economic backdrop, as the direction of monetary policy is tighter, the speed, magnitude and sequencing of this tightening must be sensitive to economic conditions.
“The slowing economy justifies fiscal easing and the argument for appropriate tax cuts.”
Mr Johnson told LBC Radio: ‘We want to make sure we are doing everything we can to reduce the tax burden.
The Prime Minister pointed to changes to National Insurance thresholds in July, the 5p cut in fuel duty and the £150 council tax refund as means by which the government is cutting tax.
Mr Johnson added: ‘He will understand that we are bringing in tax cuts as fast as we can, but what we also need to do is take care of people in a difficult time.’
The country has been hit by a spike in inflation, Mr Johnson said, and ‘what needs to be done right now is to look after people who are facing increases in the cost of living’ .
Expanding on Mr Johnson’s comments, a senior government source told the Telegraph“The more you spend, the more inflation soars. We have to be responsible.
“There is nothing we can do that inflames this further.”
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This notice was published: 2022-06-13 23:45:32