Did the mini-budget crash the UK economy in '22?

The debate about whether the 2022 mini-budget crashed the UK economy has once again become the subject of an animated discussion, with Times Radio’s Breakfast programme hosting an exchange between London Business School’s Dr Joseba Martinez and Dr Andrew Lilico the executive director of Europe Economics.

The debate continues

LBS' Dr Martinez joined Dr Lilico on Times Radio Breakfast to discuss the case for a mini-budget-inspired crash (put by Martinez), and against (defended by Lilico). Mr Lilico said that the UK economy did not crash, that GDP did not contract and that GDP in fact grew following the period after the mini-budget. “It was the fastest growth that we've had in the UK had since before the Covid period,” he said.

In response, Dr Martinez said that Andrew was right. The UK economy did not crash but added that the important point is, “what would have happened had not the BoE stepped in to mop up the mess the mini-budget made and what might have happened had there not been a series of quick interventions to arrest the ensuing market turmoil?”.

Dr Martinez underscored the seriousness of the situation by revisiting what took place at the time of the mini-budget: “The mini-budget is announced, it is this large unfunded cut in taxes that will blow up the deficit and increase borrowing, and as a result interest rates on UK bonds increased very sharply."

To listen to the full debate with Aasmah Mir and Stig Abell, Times Radio Breakfast, Times Radio, 16 January (broadcast at 9.30am), go here