As if last night’s 1922 Committee bruising wasn’t enough, Liz’s former allies are also offering a grim outlook – except unlike most of her agitated MPs, at least one is actually prepared to do it on the record. Gerard Lyons, one of the main proponents of her economics, is warning that the mini-Budget “changed the economic dynamic“, and the government quickly needs to make the sums add up.
Lyons is also warning that while raising corporation tax “into a global downturn should be avoided“, it might end up being a lever Kwasi has to pull. Speaking to the Times last night, he said “[that] is one possibility I would imagine they might want to be considering to plug any hole in the near-term finances while sticking to the commitment of allowing corporation tax to fall a couple of years out.”
This morning he added on Times Radio that while the mini-Budget was not solely responsible, it “clearly has contributed to a lot of problems” in the market. So far the government line is still “nothing has changed”…
UPDATE: Gerard tells Guido:
“The financial market reaction to the mini-Budget has changed the economic, financial and political dynamics. That should be clear to anyone. I still believe raising corporation tax (CT) into a global downturn should be avoided, as I have made clear repeatedly. But the mini-Budget has changed the economic dynamic […] the mini Budget did have an impact. This stance is not a new one… The current challenge for the Government is that it has to show its fiscal sums add up. This will be heavily impacted by the economic assumptions of the OBR. Showing the sums add-up can be achieved by a not too pessimistic growth trajectory from the OBR, along with existing fiscal space, plus outlining that debt to GDP will peak around 2026/27 before clearly trending lower. But if, after this, there is still a budget gap then the markets may demand further action.”
Gerard points out that he has “consistently spoken up for the growth plan that formed an integral part of the mini-Budget – as well as the pro-growth vision. I still stand by that, the challenge of course is if the welcome supply-side reforms can be delivered.” Quite…
This morning BSE spinners for the EU claimed a new report by Boris’ economics advisor says Brexit could wipe £210 billion off London’s economy. Yet if you actually read Dr Gerard Lyons’ report, that isn’t what he says at all. The BSE press release arrives at that figure by quoting the section of Lyons’ report about the “best case” scenario of Britain remaining in a reformed EU. They conveniently forget to mention that Lyons concludes the EU has not been reformed by Cameron’s renegotiation.
So what does Lyons actually say? In the scenario of the EU staying unreformed and Britain then deciding to Leave, he predicts London would be £120 billion better off. His personal Twitter account gives a more accurate reflection of his position:
Effectively the choice is between staying in an unreformed EU versus standing on our own two feet, in charge of own destiny.#Remain #Brexit
— Gerard Lyons (@DrGerardLyons) February 20, 2016
Anyone following the campaigns closely should know Lyons is not a Remainer…
1/ the Sunday Telegraph has a news story saying business is pro the deal citing CBI – perhaps should say big business #Brexit #Remain
— Gerard Lyons (@DrGerardLyons) February 21, 2016
2/
"It is inescapable that…EU itself remains largely unreformed" said John Longworth Dir Gen British Chambers of Commerce #Remain #Brexit— Gerard Lyons (@DrGerardLyons) February 21, 2016
3/ Chief Exec of CityUK praised the deal … I am on the board of CityUK & thought deal far from what City wanted or needed #Brexit #Remain
— Gerard Lyons (@DrGerardLyons) February 21, 2016
4/ City needed veto to safeguard itself versus Eurozone countries. EZ has over 2/3rds votes & needs to centralise further #Brexit #Remain
— Gerard Lyons (@DrGerardLyons) February 21, 2016
5/ while CityUK is clearly pro EU it had good report last year calling for over 30 reforms in EU. We haven't got those. #Remain #Brexit
— Gerard Lyons (@DrGerardLyons) February 21, 2016
a/ In Indy the Energy Sec Amber Rudd says you have to back #Remain campaign to maintain capital's position as world's lead fin centre
— Gerard Lyons (@DrGerardLyons) February 21, 2016
b/ I am not so sure regarding that. Leaving the EU is disruptive not deadly for The City of London #Brexit #Remain
— Gerard Lyons (@DrGerardLyons) February 21, 2016
c/ Alex Brummer wrote good piece in Mail in Saturday on why City could still thrive outside EU. Clearly different opinions. #Remain #Brexit
— Gerard Lyons (@DrGerardLyons) February 21, 2016
/ Just as City years ago wanted to join the Eurozone & ditch £ it now wants to stay in EU. Perhaps Known unknowns versus unknown unknowns
— Gerard Lyons (@DrGerardLyons) February 21, 2016
