The chancellor’s claim of a £22bn “black hole” in government finances was “unnecessary and probably unhelpful economically”, a former Bank of England chief economist has said.
Andy Haldane told Sky News’ Politics Hub with Sophy Ridge that Rachel Reeves’s statement in July was a “bad idea” because it generated a sense of “fear and foreboding” just when there was a new-found confidence in the UK.
Ms Reeves made the claim within weeks of taking office in what was widely seen as a warning that her first budget in October would be a painful mix of spending cuts and tax rises.
Mr Haldane said he hoped the government did not pursue a path of austerity – but warned wealth taxes also posed a risk to the economy.
He said: “The black hole event was unnecessary and probably unhelpful economically.
“It’s one thing to reveal a black hole, if that indeed is what it is. But just leaving that to sit for three months I think was a bad idea.”
Politics Live: Keir Starmer reveals NHS plan
Asked what the government should have done, he said it was “much better to say nothing until you provide solutions”.
Mr Haldane added: “That’s generated a fear and foreboding and uncertainty among consumers, among businesses, among investors… which is unfortunate because just after the election, there was a sense of refresh, a sense of renewal, a confidence about the UK both domestically and internationally.
“That [speech] just set it back on its heels a bit, which I felt was unnecessary alongside the partial measures that were taken which I think have also aroused some concerns about what might come next.”
Ms Reeves made…
