The difference between the Tory candidates’ tax plans? One is bad, the other is really bad
Rishi Sunak is losing the battle to be Britain’s next prime minister and he knows it. The former chancellor’s announcement that he would scrap VAT on energy bills for a year is exactly what it looks like: a U-turn born of desperation.
Having set himself up as the candidate of sober rectitude, Sunak has bowed to the inevitable as opinion polls show Liz Truss’s plan for immediate tax cuts are proving more attractive to Conservative party members than his wait-and-see approach.
Let’s be clear. Judging by their campaigns so far, neither Sunak nor Truss have the first idea of what to do about the UK’s deep-seated economic problems. But Truss – more by luck than judgment perhaps – is on to something when she says Sunak’s previous tax decisions are making a bad situation worse.
Some economists think Britain is already in recession, others that the country is still teetering on the brink. One thing is certain: the decision by Gazprom to restrict supplies of gas to Europe through the Nord Stream 1 pipeline has amplified that threat. The International Monetary Fund (IMF) said this week that a sudden stop to Russian energy was one of the things that could turn a marked slowdown in the global economy into something a lot more serious. That recession risk seems to be materialising, and although Britain is not dependent on Russian gas it will still be affected by surging global gas prices.
It now looks as though the energy price cap will increase from just under £2,000 a year to at least £3,300 a year – and perhaps even higher – in October, pushing the annual inflation rate well into double figures. The IMF already expects the UK economy to have stalled by the end of this year and to be the slowest growing of the G7 group of major
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