The FT’s chief economics commentator says Prime Minister Boris Johnson’s mission to ‘level up’ left behind UK regions can only mean more public spending, a wider deficit and possible tax rises
Good morning everybody it’s great to see you all here so in a huge battle for power dominic cummings prime minister boris johnson’s principled and very dominant advisor has seen off the chancellor of the exchequer and more fundamentally the treasury are you responsible for such a average resigning yesterday you know in charge this really is unprecedented there have
Been occasions in which chancellor’s have left in high dungeon and sometimes an advisors been involved most famously when nigel lawson left because of his subjection to margaret thatcher’s adviser allen walters but this is more fundamental because the adviser is going to be so powerful so what did they want to do well they wanted to take over all the advisors of
The chancellor had and replace them with their own in other words they wanted to make the treachery completely part of the number-10 operation and this is unprecedented so this is a coup of a kind of really profound transformation at least for the moment of british government so what are they going to use this power for well it’s pretty obvious that the big issue
Here the big policy issue is that such a javid the previous chancellor wanted to preserve traditional conservative treasury policy he wanted to eliminate or keep to zero the current budget deficit on current spending he wanted to control debt and basically wanted to keep taxes down he wanted prudent a sober policy brothers the way that philip hammond used to do it
And clean this is no longer where we are why did you resign it’s been a huge honor to serve as chancellor of the exchequer whilst i was very pleased that the prime minister wanted to reappoint me i was unable to accept the conditions that he had attached so i felt i was left with no option so we can expect the deficit to widen we can expect more public spending we
Can expect probably some tax increases in support of it they’re talking about some quite radical ideas like the mansion tax and there are other possibilities and what is it all going to be for well obviously the government this government wants to vindicate its decision to get a whole new class of voters in former labour constituencies to level them up as it were
And that means first of all lots more spending on high-priority public areas like the national health service probably in education twos and this would be a more general end of austerity sort of policy and then much more investment and much more spending directed at the recreating or creating a dynamic economies the difficulty with this is it just very very hard
To do the forces that have generated the rising regional inequality in the uk are very very long-standing they reflect the very powerful economies of agglomeration the way in which skilled and educated people are brought together in our major cities particularly london and and the southeast and reversing that is very very difficult from everything we know but it
Is pretty clear that this government is determined to do these things that we are in new fiscal territory we’re in new power territory as far as relationship between number 10 and the chance of number 11 is concerned and we are in a new effort to reach reform and make more dynamic parts of the british economy which have failed over a long time where does it take
Us well it’s going to be the really interesting thing perhaps the most interesting thing is does it take us to a fiscal crisis i think not but it’s certainly something challenging and you
Transcribed from video
The UK economy: Boris Johnson takes control | FT By Financial Times
