• The Invisible Hand

What does a Boris Economy Mean for You?

Updated: Dec 6, 2019

Boris’s election as PM could mark a new shift in Britain’s economic policy. For one thing, he is the first modern Prime Minister to have studied Classics (the last was Macmillan), which clearly does not make him naturally able to manage economic affairs. His premiership also could mark an end to the austerity lie in the Conservative Party as he has pledged perhaps above Labour levels of spending and with a lot less justification on how he will pay for it.

On taxation he wants to raise the threshold for the 40% tax rate from £50k to £80k. This is effectively a tax cut for the rich. Boris has been uncompromising in this policy and has not even tried to wrap it up in a complex scheme as most Conservatives do. This will contribute to widening inequality which has been increasing since the 1980s. Even if you are in favour of tax cuts, you should reject this as it will only benefit 8% of the population. It will also cost £9bn which is coincidentally exactly how much extra the King’s Fund says the NHS needs per year. He also wants to raise the point at which people start paying national insurance, this is better as it helps all but it remains uncosted. He promises to pay for this with an imaginary Brexit dividend and he has refused to pay the £39bn Brexit divorce bill. When this does arrive Boris will probably become unstuck.

You may expect a Conservative who is announcing tax cuts to have that accompanied with spending cuts, but no. Boris has pledged more police, more spending on schools and public sector pay rises. Among this he plans to raise the number of police by 20,000 and restore education spending to £5,000 per person which it has previously been, although adjusted for inflation this still lags significantly far behind previous level. Now, I have always said that the government can borrow more than they currently do, so it is the hypocrisy of the action which should be criticised. If the government was to spend more it would be much better if they spent it on better things such as improving infrastructure or properly investing in technology.

Boris does have some more progressive policies which could improve the UK economy. For example he has pledged to make the UK the ‘cleanest and greenest economy in Europe’, although details are still vague. Worryingly, he has suggested paying for this by cutting international aid. He has also pledged to raise the threshold for stamp duty which is important in reducing the costs of moving house. This will improve labour mobility which would reduce unemployment and help solve the housing crisis by making buying a home more affordable. However, in this case the steps probably aren’t radical enough and there are no details of a replacement policy such as a stamp duty land tax.

It is always hard to know in a campaign how much of these promises will actually be done when Boris gets to power. Hopefully, he will rein in the rewards for the rich and set the UK on the right path to long-term growth. However, currently his policies seem like a jumble of random give away policies with no details of how they fit together or will be paid.

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