Is Britain heading for (even) tougher times?
The Conservative government has recently announced a 'mini-budget' that gives sweeping tax cuts for corporations and high earners. The stated intention behind it is to increase growth on the supply side by attracting businesses and rewarding innovation:
https://www.politicshome.com/news/article/mini-budget-explained-kwasi-kwarteng-tax-cuts
This is highly unlikely to work and will likely fail even on its own terms. Trickle-down economics has been discredited time and time again whenever it and wherever it has been tried. Given low overall demand levels in the world economy (because many economies have problems) this is less likely to work than ever. Even if growth was created by these cuts then the likelihood would be that higher earners would save money or reinvest in property, further inflating our already very inflated housing market. The markets are not impressed and there has already been a mini-run on the pound as traders bet against the future of the UK economy.
To do this, our government has greatly increased our deficit. In recent history, our Conservatives were all committed deficit hawks and frequently attacked the left for wanting to spend more than the national income. Their latest solution is the worst of both worlds: it increases the national debt, whilst doing nothing to improve Britain's crumbling services and infrastructure. The US Republicans have done similar things in the past and with bad results. However, the damage of these policies was somewhat tempered by America's vast economic resources. When your currency is the world's reserve, then you can get away with a few mistakes.
High earners will do well, at least in the short term. Whereas poor or middle-income people will continue to feel the crush of Britain's major cost of living crisis. This is a bit like a fire engine, driving past a fire to drop a bottle of wine off at a house up the street.
I think the policies of Kwateng and Truss will run into big problems and they will try to bail things out with further cuts to our already underfunded services. They are trying to make it harder for unionised workers to go on strike, which reveals the raw class nature of their policies. Strap in.
https://www.politicshome.com/news/article/mini-budget-explained-kwasi-kwarteng-tax-cuts
This is highly unlikely to work and will likely fail even on its own terms. Trickle-down economics has been discredited time and time again whenever it and wherever it has been tried. Given low overall demand levels in the world economy (because many economies have problems) this is less likely to work than ever. Even if growth was created by these cuts then the likelihood would be that higher earners would save money or reinvest in property, further inflating our already very inflated housing market. The markets are not impressed and there has already been a mini-run on the pound as traders bet against the future of the UK economy.
To do this, our government has greatly increased our deficit. In recent history, our Conservatives were all committed deficit hawks and frequently attacked the left for wanting to spend more than the national income. Their latest solution is the worst of both worlds: it increases the national debt, whilst doing nothing to improve Britain's crumbling services and infrastructure. The US Republicans have done similar things in the past and with bad results. However, the damage of these policies was somewhat tempered by America's vast economic resources. When your currency is the world's reserve, then you can get away with a few mistakes.
High earners will do well, at least in the short term. Whereas poor or middle-income people will continue to feel the crush of Britain's major cost of living crisis. This is a bit like a fire engine, driving past a fire to drop a bottle of wine off at a house up the street.
I think the policies of Kwateng and Truss will run into big problems and they will try to bail things out with further cuts to our already underfunded services. They are trying to make it harder for unionised workers to go on strike, which reveals the raw class nature of their policies. Strap in.
41-45, M
