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Instead, he explained: “This is about supply side of the economy. It’s simply the case that people on higher incomes are usually more able and more willing to adjust their behaviour in response to tax incentives than the people on lower incomes.
“So if you cut taxes for higher income people, then it’s more likely that that will boost the labour supply and encourage big businesses that might employ high earners to locate in the UK, rather than elsewhere.”
Trussonomists believe that supply-side reforms are a necessary complement to boosting demand, and Mr Kwarteng has pledged more reforms to come in areas such as childcare, planning and cutting EU red tape.
Perhaps with a nod to previous attempts to bring soaring inflation in check, Mr Jessop said: “If you simply boost the demand side without affecting the supply side, there is a risk then that will you get a sort of a burst of inflation.
“But if you support the economy through the supply side, then you might increase demand in the process, but more importantly you’ll be increasing supply as well, so it’s not going to be inflationary in the same way.”
Though he supports the income tax cuts announced in Mr Kwarteng’s statement on Friday, Mr Jessop has said that he thought they were poorly timed, rattling the markets.
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