Nigel Farage during a campaign event in Clacton-on-Sea. Martin Weale, who’s now professor of economics at King’s College London, said mortgage costs would soar if leader Nigel Farage wins the election on July 4 or succeeds in getting his plans adopted by the next government. He likened the impact to the market turmoil after Truss’s unfunded tax cuts in September 2022.
Nigel Farage during a campaign event in Clacton-on-Sea.
“The market would demand a moron premium and mortgages would likely go up again,” Weale said in an interview. “This would be an event similar to the Liz Truss event.”
Farage’s plans include £90-billion of tax cuts and £50-billion more spending a year, paid for by slashing benefits, ending public sector “waste” and making vast savings on the Bank of England’s quantitative easing programme.
The Institute for Fiscal Studies, a think tank, said the numbers in the party’s manifesto “do not add up”.
Weale’s warnings carry weight because he correctly predicted that Truss’s tax-cutting mini budget would “end in tears” with a “run on the pound” and higher interest rates.
He made that call a day before the “Growth Plan” was unveiled in September 2022. In the aftermath of the government announcement, sterling crashed to a record low, borrowing costs spiked and the BOE had to intervene to prevent a financial crisis. Truss quit as prime minister a month later.
“Markets overlook a lot,” Weale said, but added that he believes Reform’s plans would still trigger a sharp reaction. “Tax cuts don’t solve problems with the supply side of the economy. Sterling would depreciate, long-term interest rates would rise.”
Farage claims Reform could overhaul the Conservatives to become the real opposition in next month’s election. Polls put it just a few points behind the Tories on vote share but the UK’s first-past-the-post system means it is unlikely to win many seats.
Farage previously led the UK Independence Party and the Brexit Party. While he was a key figure in the UK’s withdrawal from the European Union, he’s failed to deliver electoral success in terms of parliament seats.