Labour faces backlash after taking credit for Bank of England’s interest rate cuts
The Government came under fire last night after seeking to take credit for interest rate cuts in the UK.
Rachel Reeves used her spending review to claim her policies have ‘helped support four cuts in interest rates’ by the Bank of England since the election.
It echoed similar comments from Sir Keir Starmer at Prime Minister’s Questions just minutes earlier.
But they faced a backlash from economists.
Simon French, chief economist at City broker Panmure Liberum, said that Labour’s spending may have led to higher interest rates.
Describing himself as ‘uncomfortable with this line from the Chancellor that fiscal policy has supported cutting UK interest rates four times’, he said: ‘Basic economics would have it that looser fiscal policy necessitates tighter monetary policy, all else being equal.’
Claims: Rachel Reeves said her policies have ‘helped support four cuts in interest rates’ since the election. It echoed similar comments from Keir Starmer at Prime Minister’s Questions
The former Bank of England rate-setter Andrew Sentance said French’s analysis was ‘absolutely right’ and suggested that the Bank ‘has been over-hasty in cutting rates’.
And Julian Jessop, of the Institute of Economic Affairs, noted that while Starmer ‘is still trying to claim credit for four interest rate cuts’, the European Central Bank ‘has cut interest rates eight times in the past year’.
The Bank’s monetary policy committee is independent and Government ministers have no say in its interest rate decisions.
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