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Truss won't save UK from recession by cutting taxes, says expert

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By Euronews
People walk along a shopping street in London
People walk along a shopping street in London   -   Copyright  Frank Augstein/Copyright 2022 The Associated Press. All rights reserved   -  

With the news that Liz Truss is to become the next British Prime Minister, what does it mean for the country's economy? Taking over from Boris Johnson, Truss will have a brimming in-tray, with serious concerns about the cost-of-living crisis, the energy crisis, and Brexit hurdles.

What's more, the UK’s economy is one of the weakest in Europe, and has just slipped behind India to become the sixth largest world economy.

"I do think this is, to a large extent, the effects of Brexit," said Antonio Fatas, Professor of Economics at INSEAD business school. "Now that we're done with Covid, we start seeing the effects of an economy which is isolated from the rest of the world." 

Fatas told Euronews that he doesn't think Truss' vow to lower taxes can save the country from recession.

"I think the general recipe that [Truss] is coming with, which is cutting taxes across the board to stimulate growth [...] I'm not sure that recipe is going to deliver".

"The UK investment rate is one of the lowest, if not the lowest, among advances economies. Productivity in the UK has been suffering now for more than a decade".