Monday, September 26, 2022
An economic catastrophe
The immediate aftermath of Friday's financial statement led to the valid criticism that this Tory government is looking after the super-rich at the expense of the poor, a verdict shared by most people.
The fact is that when all the changes are taken into account, including the freezing of personal allowances, only those earning more than £150,000 will be better off as a result of the Chancellor's policies, the rest of us are financial losers.
It is astonishing, though not surprising, that a Tory government, elected on a promise of levelling up, would be so brazen in the way they have gone about this. This is a government that is now clearly on the side of the rich at the expense of the poorest in our society.
The chancellor's problem is that his own fiscal policies are making things worse, both for the country, for ordinary people and even for the measures he has put in place to try and help with the cost of living crisis.
Because the chancellor has refused to levy a windfall tax to keep fuel bills low and is instead, relying on massive unsupported borrowing, the markets have lost all confidence in his ability to manage the economy.
As a result the pound has hit an all time low, leading to a massive hike in the cost of exports. As the oil and gas we import is paid for in dollars, this has caused an 11p a iitre hike in the cost of petrol, and it has also added to the cost of the gas and electricity that will heat our homes this winter.
That means that if the chancellor is going to maintain his cap on the price of energy, he will need to borrow more to pay off the big energy companies, which will further undermine the confidence of the markets.
Talk of further tax cuts will just add fuel to this fire, when what the chancellor needs to do is to impose taxes on windfall profits and the wealthy to prop up his borrowing and steady the market.
Kwasi Kwarteng has only been in office a few days, but already he is heading for an economic catastrophe of his own making.
It is astonishing, though not surprising, that a Tory government, elected on a promise of levelling up, would be so brazen in the way they have gone about this. This is a government that is now clearly on the side of the rich at the expense of the poorest in our society.
The chancellor's problem is that his own fiscal policies are making things worse, both for the country, for ordinary people and even for the measures he has put in place to try and help with the cost of living crisis.
Because the chancellor has refused to levy a windfall tax to keep fuel bills low and is instead, relying on massive unsupported borrowing, the markets have lost all confidence in his ability to manage the economy.
As a result the pound has hit an all time low, leading to a massive hike in the cost of exports. As the oil and gas we import is paid for in dollars, this has caused an 11p a iitre hike in the cost of petrol, and it has also added to the cost of the gas and electricity that will heat our homes this winter.
That means that if the chancellor is going to maintain his cap on the price of energy, he will need to borrow more to pay off the big energy companies, which will further undermine the confidence of the markets.
Talk of further tax cuts will just add fuel to this fire, when what the chancellor needs to do is to impose taxes on windfall profits and the wealthy to prop up his borrowing and steady the market.
Kwasi Kwarteng has only been in office a few days, but already he is heading for an economic catastrophe of his own making.
Comments:
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If the main aim of the Special Fiscal Operation (we mustn't call it a budget, or the OBR would have to pass public judgement on it) was to entice the rich foreign friends of ministers to relocate to London, Kwarteng will clearly be disappointed. Whatever benefit they gain from lower taxes will be more than swallowed up by the loss of value of the currency.
Yes.The rich,if they are going to invest,need a successful,prosperous country.The UK is in a mess.They will only come here if the economy looks safe.Those with money will invest elsewhere or keep the money in the bank for future use when times turn good.Result!? they keep their money and 'trickle down economics'does not work.(Although it has already been discredited).Kwartengs economics seem ,to me, of A level standard.
A level standard ? I know that standards have generally declined but this ass is still way off the pace. Kwasi and Truss as a double act are a sound bet for crashing the UK in less than 2 months. They don't need the c.2 years until the next GE as most of the UK's population will be on its way to a new form of serfdom and the value of the elites' ill gotten gains will devalue in line with the £.
New World Order/ Great Reset/ WEF/Illuminati or whatever else conspiracy theorists might wish to call their bogeymen will be shocked by how easy it was to expedite the project. Just call in a Cabinet of duffers, stand back and watch the crash.
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New World Order/ Great Reset/ WEF/Illuminati or whatever else conspiracy theorists might wish to call their bogeymen will be shocked by how easy it was to expedite the project. Just call in a Cabinet of duffers, stand back and watch the crash.
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