The Fwah Fwah Tories thread has been very amusing but I think that the very particular threat posed by the new government needs a separate one. So far the policies to get us out of a hole add up to: Borrow vast amounts to give to the energy companies Scrap bankers bonus cap Cut stamp duty in the hope of boosting the economy by increasing the number of very rich people and hoping that a few crumbs drop off their groaning trenchers. Vampires.
Truss gets ready to be unpopular And it looks like the OBR has already started playing the mood music by not playing any mood music: Treasury refuses to publish UK economic forecast
"Ultimately the view of the Truss team is that anything that helps with their primary aim of boosting economic growth is worth any short-term political pain." I don't believe economic growth is their primary aim. Their primary aim is to be re-elected. Power is all that motivates them. What I think we are seeing is Truss trying to have her Churchill moment. "There are dark times ahead but I'm willing to make the tough decisions to get 'us' all through this" kind of thing. Her core support, many of whom won't suffer the true hardship that others will, lap this kind of guff up. What they are hoping is that the economic outlook will be better in 2 years time and Truss will be portrayed as the tough leader who helped us through the (Russian caused) crisis and therefore deserves a second term. The reality of her actually doing very little to support the poor while rewarding her banker chums will, they hope, be forgotten and replaced with a new "iron lady" myth. Unfortunately, based on previous experience, too many at the lower end of society, influenced by the popular press, will fall for it and vote for her imho.
Hopefully she's come up with some plan that'll stop millions of people experiencing fuel and food poverty and thousands of businesses going bankrupt this winter. I doubt it though
Tbh, I don't think such a plan exists. When energy prices go up again next month there will be millions of individuals and thousands of businesses that will suffer....potentially fatally. The amounts being borrowed to, in effect, prevent the January rises will not be enough for many. Even a windfall tax, although welcome imho, wouldn't be enough to prevent the fuel poverty and energy related inflation we are going to experience this winter. The only hope, from a political and economic, as well as a humanitarian, point of view for the government is that the winter is mild and there is better international economic news in the new year.
Pathetic isn't it?! If people have to spend the winter shivering at home there'll be large scale civil unrest faster than you can say Kwasi Kwarteng
Can somebody who understands these things explain how pumping billions of pounds into the economy to help pay for energy bills will help to bring down inflation?
Truss lifts fracking ban. Wasting no time in rewarding her cronies at the expense of ordinary people. This is not going to contribute anything of note to Britain’s energy security. It’s just an opportunity to rape the land for the profits of a few.
Energy bill rises are a key component of inflation, so it may be possible to massage the figures by restricting energy price growth. There are a number of problems though, which are that the price hike is only being restricted back to an already sizeable increase. Some of the effects of that increase have not yet washed through. Also, with us importing so much, we will also continue to feel the rises in global energy costs through the things we buy. And then of course it’s all borrowed anyway, which will have to be paid back. Government borrowing is soaring as will the long term debt. And that debt is more expensive to service as inflation is high and the pound is low.
Cut stamp duty? The UK housing policy seems to be "Do whatever necessary to ensure house prices NEVER fall"
We need to build at least 300,000 homes per year........will any party have the courage to put this in their manifesto for the next GE?
Or share more of the homes we already have. 2.4m households in the UK have at least one other home. Many are of course rented out to provide the already affluent even more income, but there are tens of thousands vacant for all or most of the year. Those that are rented out contribute to maintaining both house prices and rents at (for many) unaffordable levels. The actual use of land is highly restricted. Far too much land is in private hands, huge estates accommodating only a handful of people, golf courses ringing many towns, used by a minority, while the poorest live in cramped conditions. What did ‘taking back control’ mean again? The people collectively ‘control’ eff all squared.
All of which is true but doesn't really answer the question. The government are trying to boost the economy and the bank of England are trying to curb spending to bring down inflation. They strike me as opposed aims. Am I missing something?
No. Give it a month, Truss will take away BoE independence, inflation >25%, markets spooked, £<$, IMF bailout by Christmas.
Nope, you're spot on. The BoE only has one tool to fight inflation; interest rates. It works when the economy is overheating and demand outstrips supply. But that's not the problem at the moment. It's a supply issue, primarily energy. People are already struggling to survive....they don't need higher interest rates to soften their demand! And yes, it runs totally contrary to the new government's desire to stimulate demand, and therefore growth, by pumping more money into the economy by tax cuts and fuel subsidies. As @Ghost of Barry Endean says, I think the government will look to remove the BoE's independence if their policy continues to work against what they are trying to do (however economically illiterate that might be).
As I remember making the B of E independent was the first thing Gordon Brown did after Blair got in and he was universally praised for doing so. It'll be interesting to hear Kwasi's explanation if they do bring it back in house
Johnson was awful as he didn't believe in anything other himself. This new lot are fundamentalists. We already have a low tax, deregulated economy and all civil service departments have been told to slash regulation whilst the government look to do the same to taxes. We have some of the worst inequality of developed economies and they are pursuing policies that will exacerbate it all based on some spurious notion that wealth trickles down.
Thing is, they don't really believe that. They know it doesn't work that way. Trickle-down is just the smokescreen they use to hide/justify their self-enrichment at the expense of everyone else. Perversely, the true believers in trickle-down economics are a subset of the people getting p*ssed on by its adherents.
No. The only way for it to work is that everything turns out so marvellous that the spending is offset by the nation creating massive riches quickly. It will be ‘yes’ to any form of economic activity like fracking, ‘no’ to any form of protections. You’ll be able to lawfully sell your Grandma by the end of the year
Rumour has it she's going to meddle with time itself and introduce permanent daylight savings time to reduce our leccy bills in winter. I actually quite like the all-year round daylight savings idea but the Scottish farmer types won't be happy.
Not sure. Things may have changed in the last decade but looking back to the failed efforts to introduce it in 2012 the private member's bill that was talked out of Parliament then said the SoS could make the order but "Before making a daylight saving order the Secretary of State— (a) must obtain the agreement of the Office of the First Minister and deputy First Minister in Northern Ireland, and (b) must consult the Scottish Ministers and the Welsh Ministers." So looks like NI has it devolved and so has effectively a veto on UK-wide action, but presumably not the same for Scotland or Wales.
Yeah, I wasn’t sure either. I guess that, if necessary, the devolution legislation could be amended if the Scots did kick up a fuss and then they could keep it if they wanted.
The only hope we have now is either a peoples revolution or King Charles ordering his military to remove the current government and replace it with a coalition of all parties that nationalises all the energy companies. Tanks rolling down Downing Strret would be a fine sight.
Yes and interest rate hikes, which despite the still low rates compared with years gone by, will be a big challenge and may eat up a lot of the margin for consumer driven growth. People have whacking great mortgages these days and may be as vulnerable as they were in the nineties. The most well off will do very well. Less tax, mortgage rises they can afford and buoyant shares in energy. The excess wealth will be used to buy up assets as others default, whether businesses or homes. There was an unanswerable opportunity to level things out a bit and this takes us in the other direction by taking the burden of debt into public hands. The essence of socialism for the rich.
Truss paying the cost for the ERG's support in the leadership contest. JRM as BEIS Minister, and now this budget. Do the Conservatives have a mandate for any of this?
