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In her keynote speech at the Conservative party conference, party leader Kemi Badenoch is set to unveil a new economic strategy dubbed the “golden rule” aimed at reducing government borrowing and lowering taxes. Under this proposed rule, half of all savings made by a future Conservative government would be allocated towards reducing the deficit, with the remaining half dedicated to stimulating economic growth through measures like tax cuts.
Badenoch emphasized the importance of fiscal responsibility, stating, “We have to get the deficit down and we must also show how every tax cut or spending increase is paid for.” She criticized the Labour government for jeopardizing the UK’s financial stability with what she termed a “borrowing and tax doom loop.” The Conservative party aims to save £47 billion annually through cuts to welfare, the civil service, and foreign aid, in addition to committing £9 billion to policies such as a tax rebate for young people and abolishing business rates for High Street shops.
The Tory leader is determined to restore her party’s credibility on economic matters and distance herself from the legacy of former Prime Minister Liz Truss, pointing to the financial instability resulting from Truss’s tax-cutting budget in 2022. The Conservatives seek to reclaim the reputation for financial prudence from Labour, which has positioned itself as the party of economic stability. However, with challenges ahead in the autumn Budget, including a recent rebellion by Labour MPs thwarting welfare spending cuts, economists predict potential tax hikes to fund public services.
The Conservative party’s focus is on reducing public sector net borrowing (PSNB), which represents the disparity between total government spending and tax revenues. The Office for Budget Responsibility forecasts a decrease in PSNB from £137.3 billion in 2022 to £74 billion in 2029-30. The Tories are doubtful of Labour’s deficit reduction plans and express concerns over the level of borrowing and interest payments. Badenoch’s approach echoes that of former Chancellor George Osborne, emphasizing deficit reduction measures similar to those undertaken during Cameron’s tenure. Reform UK also pledges savings to counterbalance expenditure on tax cuts, healthcare, and defense, sparking clashes with the Conservatives over spending policies. Despite facing scrutiny over leadership at the party conference, Badenoch remains determined, asserting, “I’m not losing. I’m going to be winning.
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