MNI BRIEF:BOE's Broadbent-Tax Hikes Not Significant Tightening

Bank of England Deputy Governor Ben Broadbent downplayed the policy significance of increases of 1.25 percentage points in both employees' and employers' national insurance contributions announced by the government Tuesday.

Broadbent told the Treasury Select Committee that a key point was that they were being used to fund increases in health and social care spending and not to reduce the deficit.

"The rise in tax is matched by the rise in spending. So as far as the big macro numbers are concerned .. one should not ignore one half of that policy announcement .. This is not, on the face of it, a very significant tightening of fiscal policy," Broadbent said. Some analysts have talked up the impact on the grounds that the tax rises will hit consumers but Broadbent said that the MPC would carry out its full analysis in its November forecast round, when further details of government tax and spending plans will be known.