You have to give it to the new PM. She has flown out of the traps with a massive intervention in energy markets and huge tax cuts.
Moving fast…
The ideological divide has never been clearer. Tories cut taxes to drive growth, aiming to shrink the State. Labour raise taxes selectively to sort the cost of living crisis with no desire to shrink anything. The ‘shopping trolley’ days of the Johnson regime are over.
The challenge for Truss is twofold. First, the Tories have been in power for 12 years and there must be a limit to how often they can reinvent themselves. Second, it is a massive £105 billion gamble with the public finances.
And the verdict from objective markets? Interest rate and inflation expectations have been revised upwards, stocks have fallen, and Sterling is at a 40 year low, heading to parity against the US dollar.
Johnson was unTory in all sorts of ways as this blog has written about many times, but this mini (more like max!) budget is, if anything, more unTory. Debt will soar and the cost of servicing it in the face of rising interest rates will soar faster. Sound finances were always at the heart of Tory administrations but not now with these unfunded tax cuts. Rishi Sunak must be turning in his political grave…
The hope is that the stimulus will rejuvenate the economy in time for the next election and any negative consequences from these new policies can be parked until after then. Truss will have to be incredibly fortunate for this to happen at the very least in terms of timing.
Labour’s response to Kwasi Kwarteng’s statement by the Shadow Chancellor, Rachel Reeves, impressed and she looks and sounds like a future leader. Of course, the ideological divide may work in the Tories’ favour but if Labour can’t win next time round, surely we are heading towards a One Party State. Now that’s a thought…
Inside Right Politics 