Britain’s May defends free markets and debt reduction

British Prime Minister Theresa May will defend free markets and fiscal prudence on Thursday, a day after opposition leader Jeremy Corbyn told her to step aside and said his left-wing ideas now represented the political mainstream.

May will tell a conference hosted by the Bank of England that appropriately regulated free markets are essential to boost living standards, and that her government intends to cut public debt without raising taxes significantly.

“A free market economy … is unquestionably the best, and indeed the only sustainable means of increasing the living standards of everyone,” May will say, according to an extract of her speech provided by the government.

Living standards, however, have fallen since May’s Conservatives came to power in 2010, due to years of meager wage growth and bouts of high inflation – including a current one caused by last year’s vote to leave the European Union.

May lost her parliamentary majority after calling an early election in June, and now relies on Northern Ireland’s Democratic Unionist Party to stay in government.

Corbyn told his Labour Party’s annual conference on Wednesday that they were “on the threshold of power”, roughly level with the Conservatives in opinion polls.


He is the party’s most left-wing leader since the early 1980s – earlier this week his finance spokesman proposed nationalizing privately-funded infrastructure, capping credit card interest payments and squeezing more tax from big business.

May is responding with an appeal to what many Conservatives see as their pro-business, fiscally prudent core values before her party’s annual conference next week.

“Unfunded borrowing and significantly higher levels of taxation would damage our economy, threaten jobs, and hurt working people,” she will say.

Credit ratings agency Moody’s downgraded its assessment of Britain’s ability to service its debts last Friday due to concerns that Brexit would hurt growth and that the government was finding it harder to keep spending under control.

May, who began her career at the Bank of England, did not touch on monetary policy in the speech extracts provided, in contrast to last year when she told her party conference that the BoE’s low interest rates had “bad side effects”.

BoE Governor Mark Carney subsequently said he did not “take instruction” from politicians. More recently, most BoE policymakers have decided the time is now approaching to start to raise interest rates for the first time in a decade.

Thursday’s conference is being held to mark 20 years of operational independence for the BoE.

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