The UK’s Chancellor of the Exchequer, Jeremy Hunt, has criticised U.S. President Joe Biden’s green energy policies and said they risk pushing the world economy into the “dark ages.”
Biden approved a $369 billion package of subsidies for U.S. climate and energy businesses, but Hunt said it could lead to other countries putting up trade barriers in retaliation.
He said: “First of all it’s wasteful to spend money subsidising factories that would have been built anyway. Secondly, when you take subsidies away, you can end up with a business that’s not viable.”
“If we were to turn our backs on free trade, that will be a disaster for the world economy. We will enter into a dark ages period. We do not want to move to protectionism,” Hunt added.
His comments came after AMTE Power, which makes batteries in Britain, said it was considering moving to the United States because of the large subsidies available there for green technologies.
But there was better for news for Hunt when the City forecaster EY ITEM Club, which uses the same economic model as the Office for Budget Responsibility, said it expected Britain’s GDP to grow by 0.2 percent in 2023.
In January EY ITEM forecast a 0.7 percent contraction this year.
The IMF has predicted the UK economy would contract by 0.3 percent this year but Hunt, who was attending the fund’s spring meeting in Washington, said the IMF was “just one of a number of forecasters” and pointed out it had been too pessimistic about the UK economy “every year since 2016, bar one.”
Hunt told reporters in Washington: “The UK is back. We are welcomed as a country which is taking tough economic decisions to get growth back on track, with a very internationalist perspective.”
He was speaking as new figures on Thursday showed the UK economy had grown by just 0.02 percent in February but had avoided dipping into recession.
Analysts had expected Britain’s GDP to grow by 0.1 percent in February, according to a consensus forecast supplied by Pantheon Macroeconomics.
But it failed to reach that figure, partly owing to strike action by civil servants and teachers.
Hunt said the IMF’s medium-term forecasts suggested Britain’s economy would grow faster than Italy, Germany, and France between 2025 and 2028 and he said they backed his economic policies.
The IMF has been giving dire growth projections for Britain for almost a year, with high energy prices and interest rates cited as factors.
The British economy was already struggling with high inflation and energy prices when Liz Truss became prime minister in September 2022 and encouraged her Chancellor, Kwasi Kwarteng, to bring in a radical tax-cutting budget that worried the City of London and led to a big jump in interest rates.
Truss sacked Kwarteng and performed a U-turn in October 2022, scrapping most of the £43 billion worth of tax cuts, but it was not enough to save her reputation and she later resigned. She was replaced by Rishi Sunak, who she had defeated for the leadership of the Conservative Party last summer.
Last week the Office of National Statistics said the UK’s consumer prices index inflation rate rose to 10.4 percent in February, despite the Bank of England’s efforts to bring it down to 2 percent.
Hunt said: “The economic outlook is looking brighter than expected. GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost-of-living support for families and radical reforms to boost the jobs market and business investment.”
The chancellor added: “The growth numbers show there is absolutely no room for complacency. Inflation is higher than we want, growth is lower than we want.”
