Trussonomics Gets Stunning Coup De Grâce From Hunt
It's over. Trussonomics is dead. It lasted less than a month.
On Monday, one business day after the sacking of his predecessor, Jeremy Hunt reversed nearly all of the tax measures announced by the Liz Truss government on September 23. The humiliating U-turn will go down as one of the most remarkable fiscal boondoggles in the modern history of advanced economies. Truss's mini-budget will live in infamy.
Over the weekend, following Truss's begrudging abandonment of a freeze on corporate taxes, H
MMT easily explains this.
High inflation equals higher interest rates and higher taxes. Then recessionary unemployment,government work programs.
All that is required is reasonable governance.
Trickle down economics took a flogging here. Post recessionary it may have some validity as a part of the recovery.
Sorry but trickle down was always stupid.
If you want to support consumption, giving money to the least likely to spend is moronic. If you want to support investment, creating an environment where demand is strong beats giving money to already-rich investors in a depressed market… why would they increase capacity in an environment where they struggle to utilize what exists.
Only at present – where inflation has risen – does it make sense to stop supporting demand, indeed, working to constrain it. With the caveat that COVID and the war have created weird supply impacts that warrant a certain degree of national cohesion i.e. right now, if I was a politician, I would preferentially be trying to tax consumption (all but food/energy) and the rich.
Did the removal of Sir Thomas Whinfield Scholar as permanent secretary to the Treasury by Truss and Kwarteng play a significant role in the market’s reaction to the mini-budget?
It did not help, that’s for sure.
If I were a gambling man, I’d have placed a bet two weeks ago that Truss will be the shortest tenured UK Prime Minister ever. Dead pool, anyone?
Here’s where she stands now (as per wikipedia), with the shortest tenure right now at 119 days:
55 George Canning 119 days 1827 Died
56 Liz Truss 41 days 2022
Net approval rating of -61%. My word. Nixon was about net -35% when he resigned.