OK, so not even Ricardo thought it actually worked but there is this idea that tax cuts which will be followed by tax rises don\’t provide a stimulus to the economy. For rational people save the tax cuts in order to pay the future taxes. I don\’t think I actually believe this, at least not whollly. However:
The Chancellor will say on Monday that tax increases and a reduction in future spending plans are necessary to pay off the borrowing that will fund short-term emergency tax cuts.
Loudly announcing that taxes will have to rise in the future is a pretty good way of ensuring that more people do indeed save the tax cuts and thus diminish the effects of the boost.
Well done Alistair. So nice having a lawyer trying to run the economy isn\’t it?