Fiscally reckless

So, after months of inaction occasioned by the Tory Party indulging in one of its regular bouts of internecine warfare, and a further delay for some feudal mourning rituals, today the Government finally got around to unveiling a plan to tackle the looming financial crisis.

There had been some expectation that newly-minted Prime Minister Liz Truss, free of the need to pander to the assorted oddballs who comprise the Conservative membership, would come up with something semi-sensible, a hope encouraged by the fact that she had shown some ability to recognise political reality by abandoning her “no handouts” approach to the energy bill emergency and adopting a price freeze strategy, albeit one financed by debt rather than taxes on the power sector.

Alas, it turns out that Truss, and her Chancellor Kwasi Kwarteng, are even further down the neoliberal rabbit hole than was feared. The budget presented this morning, featuring tax cuts unapologetically targeted towards the wealthy, with wildly unrealistic projections of economic growth which will supposedly compensate for the resulting deficit, has not only dismayed the mass of the electorate who are not going to benefit from the abolition of the top tax rate, but also caused panic in the financial markets, sending the pound to a 35-year low against the dollar. Commentary in the press has been overwhelmingly negative, comparing the plan to the infamous “Barber Boom” of the early 1970s, an attempt by Edward Heath’s government to kick-start the economy by aggressively cutting taxes, which ended with the ignominy of an IMF bailout.

Truss seems to be betting that this time the trickle-down strategy will finally work, and that everyone will have forgotten about all the unpleasantness by the time the next election comes around. Since that poll is at most two years away, that is quite a gamble. The stake for Truss is her premiership; if she wants to wager that on a long shot I guess she can, but the stakes for the nation are so much higher that it’s hard to view this reckless course of action with equanimity.

All is not lost though; the scale of the crisis and the obvious inadequacy of the government response is provoking a backlash, as workers are forced into action to defend even a basic standard of living. The country is set to become ungovernable unless there is a change of course; one can only hope it comes before too much more pain is inflicted.