SIR Jacob Rees-Mogg has warned that the UK’s economy is in serious economic trouble which tax rises will only make worse.
Speaking on GB News, Sir Jacob Rees-Mogg said: “The Chancellor promised to end youth unemployment, give every school a library, save British Steel, raise wages, invest in rail and the NHS, with a free Terry’s chocolate orange for everyone at Christmas. She may not have said that.
“But Britain is in serious economic trouble. Productivity is low, growth is stagnant, and government debt is a record peacetime high. The country is edging towards an economic doom loop, and the government has no clear way out. It hasn’t even thought of a way out.
“Spending billions without the means to fund promises has consequences: Inflation and interest rates on government debt have been rising and may continue to rise.
“The Chancellor claims wages have risen more in 10 months than in 14 years under the Tories, but inflation means real wages are not keeping up.
JRM GB News 30:9.jpg
“Subsidies for steel, investment in rail and breakfast clubs are essentially trivial – Elastoplast measures. They do not fix the deeper problems; falling productivity, shrinking industry and growing reliance on borrowing.
“Every pound spent must strengthen the economy and boost productivity, but public sector productivity has been collapsing. Health alone has lost £22 billion worth of productivity since 2019. Overall losses could reach £40 billion.
“The private sector underperforms two as high productivity industries close and energy intensive sectors shrink, replacing domestic production with imports.
“Without major changes, productivity is unlikely to get any better. UK productivity grew 2.2% annually before 2008 but from 1997 to 2024 it averaged a meagre 0.7%.
“Forecasts now show it rising from 100 in 2019 to 106 in 2029, but in recent years, all these forecasts have been wrong and have overstated productivity, and this is still only annual growth of 1.25%.
“Labour’s vision relies on slogans. Have faith. We’ll deliver. Have a nice day! But slogans do not treat jobs or stop debt from rising.
“Continuing to promise more than the government can deliver will mean higher taxes, stagnant growth and rising debt.
“Higher Taxes invariably backfire. History shows that as rates rise people change their behaviour. They work less, they invest less – or those with capital, just get up and leave
“Today, we learned that a quarter of wealthy individuals are considering departing these shores as a result of Labour’s tax raids and fears of more in the November budget.
“The great Arthur Laffer argued through his famous curve that setting tax rates too high actually reduces revenue. High Income Tax discourages work and drives people out of the country.
“Capital gains tax receipts have fallen for two years after successive reductions in the tax free allowance. Owners of shares and second homes are avoiding selling as replacement assets must perform much better to recoup the tax that has been paid.
“Ireland collects three times as much business tax per person because it has got lower business tax rates. Revenue from alcohol duty on spirits has also fallen after the last budget raised rates.
“Short term gains from higher National Insurance come at the cost of fewer new jobs, lower investment and higher long term spending pressures. Further hikes on property, savings or carbon risk exactly the same problems.
“Britain needs a government that faces economic reality. It must cut waste, focus on growth, manage the economy responsibly and make investments that last.”
