The Chancellor has just announced that he will be dropping the deficit reduction programme, something that EEF, the manufacturers’ organisation, called for last week in response to the referendum outcome.
Ms Lee Hopley, Chief Economist at EEF, says: “This move will be viewed as a much-needed pick-me-up after a week of turmoil and bad news.
“The Chancellor is right to scrap the Government’s hitherto relentless push on deficit reduction. The uncertainty that businesses are currently grappling with should be helped by politicians galvanising around the actions that can reasonably be taken to offer some policy stability - easing up on deficit reduction is one such measure.
“A move to alleviate concerns that Government might add to business costs with tax increases, or cut back investment in key areas of infrastructure or business support, will limit the impact on the UK economy. This is particularly important in light of the Bank of England’s acknowledgement that monetary policy can only do so much in the face of a large negative economic shock. Indeed, Government must sooner rather than later commit to infrastructure investment and more support to get critical investment decisions over the line in the UK.”