Former Conservative chancellor Sajid Javid has advised PM Boris Johnson to avoid pursuing “self-defeating” tax rises after the COVID-19 pandemic. He said it will “strangle” any economic recovery.
Sajid Javid walked away from his place as the Treasury in February after a row with No 10, also urged the government to re-open the economy “as far and as quick” as possible, suggesting the best course of action was “running the economy hot”.
The senior Tory’s intervention comes after the Bank of England’s stark warning that the UK economy could contract by close to 30 percent this summer and caution against the greatest annual fall in GDP since 1706.
When asked who would repay the debt at the end of the crisis, Sajid Javid told Sky News that the crisis should not change “our understanding of the economic model that leads to the highest growth rate possible which is still going to be a free enterprise, low tax, competitive economy”.
“This is the best way to make sure that we are earning enough as a country to pay for the public services we all rely on. It was true then, and it’s true now. And that’s going to be critical, that we stick with the economic model that we know that works,” he said.
He was also asked about the possibility of tax increment, the former cabinet minister said: “I think we should try to avoid tax rises simply because it’s self-defeating, you know if you have taxes that rising, especially if they rise significantly after this crisis, it will strangle any economic recovery.”
The PM, Boris Johnson had earlier this week reiterated that he was opposed to another round of austerity to repair the economic damage of the coronavirus crisis while making clear to MPs that he had absolutely no intention of imposing further public spending cuts.
When questioned about austerity, Mr. Javid claimed the government cannot “continuously, sustainably keep borrowing. And so we will have to bring the finances under control.
“But again, I think the best way to keep spending what we need on the public services, whether it’s the NHS, it’s schools, all these things that we rely on, is to focus on the growth of the economy, and not higher taxes.” Sajid Javid said.
While speaking on the current lockdown effect on the economy, Mr. Javid advised ministers to consider relaxing restrictions at some point in the “future” for younger people in the country and focus protection on “those that are the most vulnerable”.
He also said “doing so would allow some people to get on with their lives and at the same time help the rest of us by rebuilding our economy which benefits everyone”.