Anyone who trills that this omnishabolic, shitshow of a train wreck Special Fiscal Operation is a ‘true’ Conservative budget really has no grasp of political history. There are three important questions. Will they hold their nerve? How is this going to be paid for? And at what cost?
I am not going to bore you with all the old arguments about Barber’s dash for growth which led to the Tories being kicked out of office, inflation roaring to 25% and our humiliation at having to go cap in hand to the IMF for a loan. No matter what levels of growth we have there should be three economic priorities. Control inflation, control inflation, control inflation. It is the enemy within which destroys economies, savings. Everything.
As Sunak never ceased reminding us during the leadership campaign, the course this government has embarked upon is an dangerous illusion. A fairytale lauded by the far left. Magic money trees soon choke investment and growth. Britain has now become a toxic right wing experimental theme park where all of us are being cranked up to the top of the roller coaster and awaiting our free fall, white knuckled ride to destitution.
The principles are fine. There is nothing wrong with cutting higher rate tax to 40%. But raising the rate to 45% was a trap set for us by Gordon Brown and Laughing Boy fell into it. There are decent hardworking families holding down perhaps five jobs to keep their homes warm and food on the table who are terrified of what the future holds. Giving money to the wealthy now are the most terrible optics. Cutting the cap on bankers’ bonuses is another perfectly sensible goal. To be honest they had circumvented it anyway. At the right time both these moves would have sent out the right mood music that Britain was open for business. But now? An act of insanity, which in the eyes of the public will make partygate look like a stroll in the park.
What really has amazed me is that the party of the free market doesn’t understand how markets work. Laughing Boy seemed to think that they would be delighted at this bold and radical approach to running the economy. Hah! They are in the business of making money. The bond markets are ruthless money grabbing bastards. They always have been. So the Daily Mail headline attacking city slickers making billions on shorting the pound is quite daft. It’s what city slickers are paid for. Don’t blame them for economic policy that they can cash in on.
Sadly, Laughing Boy tried to beat the House in the bond market casino. He lost. Ten year gilts are on an upward spiral which means the cost of servicing government debt is spiralling upward.
The markets have no confidence in this fiscal event. The pound has rallied because of the promise of Bank of England intervention, not because the FE is a workable policy. Interest rates will probably increase to a full percentage point next week. And this will be the just the beginning. The housing market is expected to crash and cheap mortgages will become a happy memory not to be repeated for a generation. So what does this remind you of? Negative equity, repossessions, stagflation. Oh, and because the pound is at an all time low fuel prices will probably rise by about 13 pence a litre which will rip its way through the economy boosting inflation further.
And what a gift for Labour at their party conference. The truss dead cat bounce has finally been buried with a 17 point Labour lead. Oh, and 74% of voters thinks the FE is quite wrong.
What an avoidable cluster fuck. Why on earth didn’t Kwarteng publish the OBR analysis of these policies? The trouble is that Laughing Boy is stupendously clever, has a superiority complex that would would make Trump blush and won’t take advice from anyone he regards as intellectually inferior, which is just about everyone except for Sir Tom Scholar which is why he had to go.
So what does he do now? The sad answer is to hold his nerve. A U turn at this stage would rattle the markets even further. He has another Special Fiscal Operation in November, hopefully with OBR analysis. Who knows, it might be brilliant. I really do hope so.
Next week is the Conservative Party Conference. It will be a period of mourning for a lovely old girl who served us so well for many years. Her name was Prudence. We will never see the like again.