The Party’s Treasury spokesperson, Jonathan Edwards MP, has warned that abandoning George Osborne’s previous targets is not enough, and will not lead to an ease in spending cuts. He has called on the Chancellor of the Exchequer to acknowledge that Westminster’s ‘austerity ideology’ has failed and to announce a change of strategy in his Autumn Statement.
The Chancellor has already abandoned his predecessor’s target of achieving a budget surplus by 2019-20 but the Carmarthen East & Dinefwr MP warned that due to the weakened economic outlook following the Brexit vote, abandoning this goal will not mean that planned cuts in public spending can be reduced.
The Institute for Fiscal Studies (IFS) has warned that austerity measures will have to continue beyond 2020 because of a £25 billion-a-year hit to public finances arising from the Brexit vote.
The Autumn Statement will outline updated economic forecasts from the Office for Budget Responsibility (OBR). In last year’s Statement the OBR forecasted economic growth of 2.4 per cent in 2016 and 2.5 per cent in 2017. It is expected that, as a result of the Brexit vote, forecasts will be revised down in this year’s Statement which will result, in turn, in reductions in the expected increase in tax revenues.
Plaid Cymru’s Treasury spokesperson, Jonathan Edwards MP, said:
“It is now almost seven years since the Tories first promised to eliminate the deficit through cutting spending. We were told that the deficit would be eliminated by the end of the previous Parliament, which was almost two years ago, but of course, the deficit is nowhere near eliminated.
“It’s no coincidence that the Tories have stopped talking about their ‘long-term economic plan’. Their plan has failed. You cannot deal with a country’s economy like a household budget and it is naïve to try to claim otherwise. When dealing with the Budget of a State, cutting public investment has negative impacts for income too.
“Abandoning Osborne’s fiscal charter shows that austerity was an ideological choice, rather than an economic necessity as the Westminster parties tried to tell us. It was a choice that has inflicted pain and suffering on the most vulnerable people in our communities, and for what? The deficit is still there.
"Even if the Chancellor loosened the straight jacket of his predecessor’s deficit targets, downward revisions of economic growth as a result of the Brexit vote will mean a reduction in revenue for the Treasury and therefore the planned spending cuts will still need to take place and the failed austerity ideology will continue.
“The Chancellor needs to accept that the Tories’ so-called ‘long-term economic plan’ has failed, and change course. He should use his first Autumn Statement to make that bold decision.”