“What I am looking at is the growth plan and delivering what is a radical plan to drive growth in this country, to reduce taxes, to put more money that people earn in their pockets” (…) “No, we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn’t proceed with the abolition of the rate” (…) “We can always have a debate about when we could’ve made the decision, but the important thing is we’ve made the decision and we can now move forward with making the push for the growth plan” – Chancellor Kwasi Kwarteng on BBC Breakfast (03.10.2022).
The Biscotti Mini-Budget launch of tax-cuts for the wealthy and the richest of the Kingdom has backfired. This has been seen with how it has destroyed the confidence in the Pound Stirling and the trouble it caused on the gilt market or in the mortgages market.
It doesn’t help that after the effect it, the Chancellor says: “We get it”. Well, the self-destruction and the losses are already been seen over the last few days. The Bank of England had to come in and salvage the gilt market. Because, the Chancellor and Prime Minister Liz Truss clearly didn’t get what they were doing.
The BDO United Kingdom analyst even wrote this about the Chancellor: “Kwasi Kwarteng is a strong ally of Truss’, and is broadly aligned with her stated economic policies, including on windfall taxes, raising income tax thresholds and reductions in Capital Gains Tax. As Chancellor, Kwasi Kwarteng will be taking on a Treasury under immense pressure, with Truss’ proposed sweeping tax cuts leaving large holes in the public finances. Historically he has been a proponent of low taxation and free markets, but when confronted with the growing calls for direct government intervention to support businesses and households through the current energy crisis, these leanings will be put to the test” (John Hickman – ‘What to expect from the new Prime Minister – Liz Truss’ 01.10.2022).
These words are the most true as they can be today. The Chancellor and Prime Minister did test the market, but that already has a huge cost. The implications of holding on and trying to give tax-cuts to the riches. Could either end up in a quick rebellion in the Tories party itself. The Tories MP could easily have sent enough letters to the 1922 Committee and end Truss reign quickly. That’s why they are backtracking now…
The policies are what these two actually believe in. Truss and Kwarteng did really think it was legit and was reasonable to do all of it. That’s why they held on and pushed the “growth plan” which was a short-trip to recession and a faster downturn. There are already ramifications for several of home-owners and companies holding on to the pensions. This will linger on and will not be settled by the change today.
The Tories are really at a cross-roads, because they will push for austerity, but also more perks for the wealthy. While the Tories will take away benefits and ensure less deficit in the budgets ahead. The Tories can act like this was one off, but we know it easily could come more like this.
Kwarteng and Truss has just showed what they are willing to do and risk. They risked the financial market, the mortgage industry and people’s pensions, just so the wealthy could get more in their pockets.
No one can trust these two, neither have confidence in their decisions or choices. Because, they just trying to cover the richest people and give them leeway, while the poor have to struggle even more. Peace.