14 May 2025, 12:49 | Updated: 14 May 2025, 12:51
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The UK faces an “immediate and violent” sterling crisis if Reform wins the next election and stays good on its pledge to cut taxes, economists have warned.
Nigel Farage’s party has vowed to hike up the minimum income tax and corporation tax thresholds.
These measures would spark a run on the pound, Simon French at Panmure Liberum has claimed.
He said rolling out the party’s manifesto pledges would create an £80bn fiscal hole in the treasury’s coffers, sending borrowing costs for households and businesses surging.
“Those plans that we think would create an immediate fiscal gap of £70bn-£80bn per year – would in our view create the high probability of an immediate and violent sterling crisis,” Mr French said.
Read more: ‘Nigel Farage must never be Prime Minister’, warns Rupert Lowe after Reform UK allegations dropped
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He warned former Prime Minister Liz Truss’s disastrous mini-Budget that crashed the economy would not even matched the scale of the damage he predicts would be caused by Reform’s economic program.
“Experimentation with an immediately higher fiscal deficit profile – of an additive scale set to be two-to-three times larger than anything attempted by the 2022 mini-Budget or 2024 October Budget – would create sharp rises in UK sovereign, commercial and household interest rates in our view,” he added.
Reform UK Party Chairman Richard Tice has hit back at Mr French’s claims.
Defending Reform’s economic agenda, he said mr French had failed to “look at the savings that we’ll make” in his analysis or his party’s commitment to fiscal responsibility, branding Panmure’s assessment “juvenile claptrap”.
But economists have also raised the alarm over Reform’s economic plans.
Last year, an analysis Institute for Fiscal Studies (IFS) predicted that funding boosts for the NHS “would not be nearly enough to meet Reform’s incredibly ambitious commitment to eliminate waiting lists within two years”.
Reform hailed its successful performance in the local elections as a “big moment” for the party.
Meanwhile, Labour lost 180 council seats in local elections on May 1, including the Runcorn and Helsby by-election – one of their safest seats, which was snatched up by Reform.
Speaking to LBC, Farage said the country has “lost faith” in Labour and pointed to the increase in channel crossings as a key reason for their defeat.
Addressing Sir Keir Starmer, Farage said: “I would just say to him, very simply, that people who put trust in you, that is eroded, albeit almost eradicated, in a very short space of time.”
This week, Starmer unveiled a migration crackdown and made a speech warning the UK risks becoming an “island of strangers”.
Speaking from Downing Street on Monday, the PM promised net migration will fall by the end of this parliament as he outlined a slew of immigration changes.
Migrants have been told they need to spend a decade in the UK before they can apply for citizenship and English language requirements will be increased for all routes into the UK, as ministers look to bring down net migration which reached 728,000 last year.
