Zia Yusuf, chair of Reform UK, delivered a bold economic message from the 34th floor of the Shard with the City of London as his backdrop. During a press briefing accompanied by a traditional English breakfast, he reiterated the party’s recent announcement that it would accept bitcoin donations and implement tax and regulatory changes to promote cryptocurrency adoption in the UK.
This stance, albeit striking, raises eyebrows primarily due to the party’s broader tax and spending strategies. As Reform enjoys favourable polling figures, it is increasingly facing scrutiny, particularly from Labour leader Keir Starmer, who accused it of embracing “fantasy economics” reminiscent of the failed fiscal policies of former Prime Minister Liz Truss. Critics, including Starmer, argue that Reform’s plan for unfunded tax cuts could unsettle financial markets, mirroring the disastrous fallout from Truss’s mini-budget.
Reform’s ambitious tax pledges total a minimum of £60 billion, prominently featuring a proposal to raise the personal income tax allowance to £20,000—significantly higher than the current £12,570—and increasing the threshold for the higher income tax rate from £50,271 to £70,000. Richard Tice, Reform’s finance spokesperson, suggested that many critics lack understanding of the “Laffer curve,” a theory suggesting that lower tax rates can stimulate economic activity and ultimately boost government revenue.
However, the assertion that tax reductions pay for themselves has faced considerable criticism. Economists, including Greg Mankiw, have dismissed the idea as misleading. Tice acknowledged the existence of an optimal tax rate but asserted that Reform would implement tax cuts in a sustainable manner. Critics lament that the party’s promises largely consist of substantial tax reductions lacking adequate plans to offset the country’s existing budget deficit and astronomical national debt, which exceeds £2.7 trillion.
With economic growth stalling, inflation surpassing targets, and borrowing costs rising, Reform’s ability to finance its proposals remains questionable. Adding to the concern, the Institute for Fiscal Studies indicated that the fiscal policies outlined by Reform could lead to losses of £60 billion to £80 billion annually without corresponding cuts or tax increases to balance the changes.
Yusuf mentioned that these plans are still evolving as the party gears up for its 2029 manifesto, suggesting that the current proposals might not mirror those made for the upcoming general election. He claims potential savings could be realised through the elimination of net zero commitments, reductions in overseas aid, and cuts to specific government expenditures.
While Yusuf’s assertions may reflect a broader, evolving economic strategy, scepticism remains around the feasibility of these savings. Reform risks echoing past mistakes if it fails to establish a sound basis for its ambitious economic agenda, potentially jeopardising the confidence of investors in the process.