CBI chief says Rishi Sunak must avoid ‘death loop’ of austerity cuts

Rishi Sunak must avoid the “death loop” of raising taxes and strictness public sector cuts, said the head of the Confederation of British Industry (CBI).

The incoming prime minister is expected to retain Jeremy Hunt as chancellor and stick to the October 31st date for the government’s debt reduction plan.

Tony Dunker, director general of the CBI, warned Mr Sunak not to be completely rubbish Liz Trussideas about economic growth – arguing that a relentless focus on downsizing will lead to a negative spiral.

“Let’s remember that the 2010s started with some austerity and then ended with very low growth, zero productivity and low investment, right? It was not a successful growth strategy,” he told BBC Radio 4 today program.

In a statement on October 31, he added: “If all there is is tax increases and spending cuts, and there’s nothing about growth, the country could end up in a similar kind of demise where all you have to do is go back every year to find even more tax increases and more spending cuts because you don’t have growth.’

Opposition parties, unions and campaign groups have also warned Mr Sunak against scaling back public sector austerity measures when he takes office at No 10 on Tuesday.

The chancellor said he was facing “bewilderingly difficult” spending decisions, reportedly asking Whitehall departments beyond health and defense to find 15 per cent cuts.

Economists warn it needs to find up to £40bn a year to balance the balance sheet, even after scrapping corporation tax and income tax.

Sunak-backed Tory MP Victoria Atkins said the medium-term financial plan was “still in the diary” for October 31 – saying the new prime minister would “do everything possible to make it happen” – but could not eliminate delays.

Mr Danker’s intervention followed a scathing attack on the Tories’ economic policies from former party donor Guy Hands, who warned the country was “on the way to becoming the sick man of Europe”.

Mr. Hands said he was wrong Brexit The agreement was based on the failed “Thatcherite” vision of a low-tax, high-growth economy and suggested that Britain might now need help from the IMF.

The founder of private equity firm Terra Firma said the Tories must now “recognize the mistake they made and the way they negotiated Brexit” and put in place someone with the “intellectual capacity to renegotiate Brexit”.

But Mr Dunker said Mr Hands was too pessimistic. “If he is right, then we are here [already] in the Doom Loop. I just don’t think he’s right,” he told Radio 4.

“In this country, we have the potential to be world leaders in clean energy, life sciences, artificial intelligence. [artificial intelligence], in fintech. We have the potential to grow.”

The CBI chief added: “This time we cannot afford a government that does not do what is necessary to unlock this potential. This, I fear, is the legacy of Brexit, it is the legacy of Covid, it is the legacy of the mini-budget.

“Yes, first of all we need to stabilize the situation, but if we don’t have a plan for growth, I’m afraid that the next decade will not have good results.”

Meanwhile, a senior government expert has warned that Mr Sunak’s campaign promise to overhaul the 2,400 EU laws retained after Brexit within his first 100 days in office is not practical.

Jill Rutter, a former Treasury fellow at the Institute of Government (IfG) think tank, said it would be “impossible” to have “any decent level of parliamentary control” over changes to the legislation.