Leeds economist trashes Kwasi Kwarteng’s ‘folly’ budget statement as plummeting pound could lead to ‘bleak’ winter for families

It follows a turbulent week for the chancellor, and Prime Minister Liz Truss, after the controversial “mini-budget” saw announcements of tax cuts for the wealthy, which sent trading floors into chaos and led the pound to fall to its lowest level against the dollar for nearly four decades.

David Spencer is a professor of Political Economy at the University of Leeds – he believes people living in Leeds could be in for a grim winter following this news, and accused the Government of “letting ideology get in the way” of running the economy.

Prof Spencer said “The pound is falling because there is a loss of confidence in UK economic policy.

"The fall in the pound reflects the folly of the mini-budget last Friday. The move to raise borrowing to fund tax cuts isn't seen as credible with the result that the pound has plummeted.”

Following Mr Kwarteng’s announcement last Friday, the value of the pound against the US dollar fell to its lowest level for 37 years.

Warnings were made today by the International Monetary Fund, which claimed Kwarteng’s budget plans had the potential to increase inequality in the UK, and urged the Government to change course with a planned statement next month.

Prof Spencer believes those borrowing money will face “squeezed incomes” over the winter.

“[Your] readers should be very concerned,” he said. “The fall in the pound means higher import prices.

"This will fuel higher inflation. The Bank of England will be required to raise interest rates sharply to curb inflation.

"Borrowers will face higher costs and squeezed incomes. The winter could be bleak indeed.

"If there is any lesson here, it is that governments should think through the consequences of economic policy and not let ideology get in the way of managing the economy effectively.”

David Spencer has lectured in economics at the University of Leeds since 1998, becoming a professor in 2013. His works include Making Light Work: An End to Toil in the Twenty-First Century, and The Political Economy of Work.