A former deputy governor of the Bank of England has warned the NHS faces an existential threat as a result of government tax cuts and fiscal plans.
Sir Charlie Bean, who is also a member of the Office for Budget Responsibility, said the government has lost confidence of markets and “the thing about credulity is when you lose it, it can be quite difficult to get it back”.
This comes after the International Monetary Fund warned it was keeping a close eye on the situation in the UK, and the mini-budget would “likely increase inequality” in the country.
On Wednesday morning the pound slumped again by as much as one per cent to around $1.06, while the dollar has hit a fresh 20-year high.
Speaking to Sky News this morning, he called on the Bank of England, which he still advises, to carry out an emergency rate rise of 1.5 percentage points.
“I would say that we’ve got a few steps down the road. It is serious. And I don’t think the government can really afford just to say, ‘Oh, this is just a little bit of froth in markets; they’ll come to their senses as soon as we lay out our full programme.’
“There are real questions to be addressed about how the government’s fiscal strategy hangs together, and how it can ensure that the debt to GDP ratio is back on to a sustainable path by the medium term.”
He said the “ideal would be to get a Tardis and go back and undo the errors”, calling it “implausible” that current measures were being used to try and promote growth.
Bean warned the scale of the cuts, thought to be upwards of £50bn, would have a huge impact on public service and require “a very fundamental rethinking of the boundaries of the state.”
The top adviser said Britain may need to be “be prepared, say, to move away from our own health service, which is free at the point of delivery to one funded by social insurance like they do in Germany.”