The Archbishop of Canterbury has taken aim at Liz Truss, warning that he is “deeply sceptical” about trickle-down economics.
The Most Rev Justin Welby, who made the remarks while on a tour of Australia, said that if rich people have money they are more likely to save it than spend it.
He argued that a better way to generate spending in the economy would be to put more money into the pockets of those who need to buy food.
“I’m not going to make a party political point because both parties are deeply divided and I’m not going to talk about Australia because I just don’t know the situation,” he told The Guardian.
“But in the UK, the priority is the cost of living, with the poorest. And from an economics point of view, I’m deeply sceptical about trickle-down theory.
“You know, if you cut money for the rich, ever since Keynes wrote his general theory in 1936, whenever it was, he showed very clearly that the rich save if they’ve got enough to live on.
“So if you want to generate spending in the economy, you put more money into the hands of those who need the money to buy food, to buy goods, to buy basic necessities.”
‘No moral case’ for budgets that affect the poor
Asked whether there was a moral case for governments setting budgets that disproportionately affect the poor he said: “No, I can’t see a moral case for it. No.”
He is the latest public figure to speak out against the theory, which dictates that the best way to help the poor in society is to help those richer, because when richer people are better off they spend and invest in ways that boost economic activity, creating jobs for the poor.
Last month Joe Biden, the US President, spoke out against it ahead of his first official meeting with Ms Truss.
He said at the time that he was “sick and tired” of trickle-down economics, adding that it has “never worked”.
It is not the first time the Most Rev Welby has spoken out against trickle-down economics. In a 2020 sermon at Southwark cathedral he said that Jesus Christ “commands a bias to the poor, not the trickle-down theory of economics”.
And in 2017 he said rich people should pay more taxes because people tend to “hold on” to what they have got.
He said at the time that trickle-down economics “fails” as an effective form of redistribution, adding that we need a system that “spreads the goods of wealth more evenly across society”.