Spending cuts made necessary by mini-Budget ‘could spell end of NHS’, top economist warns


The government may have to cut public spending so drastically in the wake of the mini-budget that it could threaten the existence of the NHS as a free service, a senior economic policy maker has warned.

Sir Charlie Bean, the former deputy governor of the Bank of England, has warned that the government’s fiscal strategy requires deep cuts in public spending – and the health services are likely to suffer as a result.

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Chancellor Kwasi Quarting announced budget plans last week to scrap the highest tax rate and lower the base rate to 19 pence per pound, sending the currency to an all-time low against the dollar. He pledged to put in place a package of reforms on November 23 in a bid to ease panic in the markets, although this is likely to include cutting public spending to fund his tax reforms.

Speaking to Sky News, Sir Charlie warned that the economic situation was “likely to increase inequality” in the UK and would require significant spending cuts.

Frankly, the only way to deal with this is to fundamentally rethink state borders.

“So if you want to reduce the share of government spending to GDP, you have to be prepared, for example, to move away from our health service, which is free on delivery to a service funded by social insurance as they do in Germany.”

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And he added, “It’s serious. And I don’t think the government can really just say, ‘Oh, that’s just a little bit of foam in the markets; They will come to their senses as soon as we put together our full program.

“There are real questions to be addressed about how the government’s fiscal strategy relates to each other, and how it can ensure that the debt-to-GDP ratio returns to a sustainable path over the medium term.”

Any cuts in NHS spending would be another blow to the health service as it struggles with a backlog in care as well as awaiting treatment in A&E departments. Prime Minister Liz Truss has insisted the NHS is one of her top three priorities in government.

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Ministers also face a row with trade unions over wages, with the Royal College of Nurses (RCN) due to hold the vote for a strike next Thursday. The union has called for a 5 percent wage increase above inflation, claiming that years of pay cuts in real terms have put patient safety at risk.

Meanwhile, the International Monetary Fund on Wednesday rebuked the chancellor’s budget, saying it was “closely watching” developments in the UK.

“Given high inflation pressures in many countries, including the UK, we do not recommend large, untargeted fiscal packages at this point, as it is important that fiscal policy does not run inconsistently with monetary policy,” the IMF said.

“Furthermore, the nature of the UK’s actions is likely to increase inequality.”

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