Mini-Budget

The Magic Money Tree Returns

When I was listening to the mini-budget for a moment I thought I’d be transported to a parallel universe where Jeremy Corbyn was PM. It sounded like the magic money tree of reckless borrowing had returned.

It’s hard to imagine a Conservative government taking such reckless risks and displaying such poor economic acumen. Love her or loath her, but Margret Thatcher must have been turning in her grave. So far from the balanced budget, she preached.

But sadly this seems to demonstrate how far to the right the Conservative government has swung. The government is putting ideology above both business sense and moral fibre and is going to cause:

Roulette Wheel Economics

Lacking economic sense and moral fibre

The theory is the economy will grow enough that the tax returns, even at the much-reduced rates, will pay for the debt.  The reaction of the market, with the pound plunging to a 50-year low, and a massive hike in government borrowing rates (bond yield rate), shows the market clearly doesn’t believe this “bet it all on black” Roulette Wheel economics will work.

More likely inflation will rise (the drop in the £ is already increasing costs for fuel and other imports), forcing the Bank of England to increase interest rates (they have already indicated they will). This will particularly hurt young people trying to get on the property ladder, far more than a one-off decrease in stamp duty will counter.

The morals fibre is poor as well. The ultra-rich do really well, while most of us will see a very modest £ decrease in our taxes which will be swamped by the increasing living costs from higher inflation. Those on low income are going to really suffer.