Zahawi: I will go for growth

6 July 2022

5:37 PM

6 July 2022

5:37 PM

The big winner from yesterday’s drama was Nadhim Zahawi. Just ten months ago he was a junior minister: now he holds the second most powerful position in government. The newly-appointed Chancellor has today done his first round of interviews, appearing across a range of outlets to outline his plans for the Treasury.

As Kate Andrews write elsewhere on Coffee House, a key faultline between Rishi Sunak and Boris Johnson was fiscal responsibility. The former was unwilling to support spending increases without corresponding tax hikes: the latter is keen to cut taxes without slashing spending. Zahawi has already signalled he will be less evangelical about these issues than Sunak, hinting on Sky News this morning that next year’s planned corporation tax rise could be shelved.

The tax is set to rise from its current rate of 19 per cent to 25 per cent from next April. But when asked about the scheduled increase, Zahawi said:

I will look at everything.There’s nothing off the table. I want to be one of the most competitive countries in the world for investment. I know that boards around the world where they make investment decisions… the one tax they can compare globally is corporation tax and I want to make sure we are as competitive as we can be whilst maintaining fiscal discipline.

In his subsequent interview with the BBC’s Today programme, Zahawi was keen to paint himself as a ‘pro-growth’ Chancellor; an implicit contrast with his predecessor who preferred to focus on ‘balancing the books.’ He told Nick Robinson that ‘my task is to rebuild the economy and return to growth’ adding that ‘nothing is off the table.’ Zahawi claimed that ‘I will be the evidence-led Chancellor’, saying that ‘I have been appointed because I will be evidence-led and my focus is to rebuild the economy and then return to growth.’

This would seem to chime more with Boris Johnson’s economic thinking. The Prime Minister has already hinted at further tax cuts, telling 80 Tory MPs last night that these now might ‘be easier to deliver’ with Sunak’s departure. Zahawi’s early interviews suggest that these will come sooner, rather than later.

Government loyalists will be hoping that they will serve as a boost to both the country’s economic fortunes and the political ones of Boris Johnson too.

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