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Is the mini budget a recipe for doom?

Massive borrowing, massive tax cuts.

Will it end well?

(Pundits say it reminds them of Barbers's disastrous budget in 1972)

Non budget statement today is the biggest and most irresponsible change in UK government finances ever, as far as I can recall.

50B of unfounded tax cuts, and no mention on how they will be funded, except the very poorest part time workers on universal credit will be squeezed even harder to make them get full time jobs. This is ludicrous, as most people in that situation cannot do full time work for reasons of health, family or care responsibilities and will simply give up work altogether.

I personally gain, as I am moving house in a few weeks and will pay less stamp duty. However I work part time so I can care for my adopted child who has serious mental health and learning issues, so if I were claiming universal credit I would be worse off.

As it is, I claim carers allowance, and last April my income went £2 over the limit for one month, before the earning allowance was raised due to inflation. Not only did I lose 100% of my allowance for that month, it took the DHS six months to reinstate my payments and refund my missing payments.

If you are poor in this country the government are brutal and totally uncaring.

I remember back in 1990 I was at university and arguing online in favour of trickle-down economics, which I naively thought I had just invented. One of my friends, from a working class background wrote a stinging one line reply: "Trickle-down economics - it's crap". This was 32 years ago. It was also the start of my journey from being a true believer in Thatcherite/Reaganite idealogy to a preference for low debt, progressive tax approach that uses tax revenue to invest in infrastructure, green industry, and health & community projects.

This mini budget therefore seems to be the opposite of everything I'd hope for or vote for, but it's hardly surprising. Every year from 2010 has taken us further in this direction, and this ideological approach is now taking its true and final form.

If I were still earning the big bucks without the burden of a social conscience, I'd no doubt be delighted for myself. But the reduction of national insurance and income tax is going to do almost nothing for those who really need the break. I mean, I'm going to save a few pounds, but my gas bills this year have already trebled from October 1st - even with the new cap, or at least they will if I dare turn on the central heating this winter.

There's only one selfishly good thing for me, and that's the weakening pound as I have some dollar investments. But then, everything you import goes up, and our exports have apparently been cut by a third since Brexit.

I guess homeowners will benefit a little, as lower stamp duty means buyers can pay more, and houses look very cheap to foreign buyers and second home buyers with all that extra income they suddenly have. So prices will rise there too, as they always do anyway with assets in a high inflation environment. It's all just a recipe for a massive increase in the gap between rich and poor.

I wonder how the Scottish govt will respond? They don't have to follow suit with the tax cuts, and they get more grant from the treasury to spend automatically.

We have a general election in 2 years. Can't wait to see what the polls say. Big gamble by Truss to assume that things will improve in time for the next election, but I guess if they lose they can dump the crisis on the opposition and walk away, smh.

Vortex2 wrote: ↑23 Sep 2022, 10:48 Is the mini budget a recipe for doom?

Massive borrowing, massive tax cuts.

Will it end well?

(Pundits say it reminds them of Barbers's disastrous budget in 1972)

It is absolutely stark raving mad. The country is close to insolvency, and she thinks the solution is hardline Thatcherism? This is not 1981. There is no north sea oil boom coming, no fat to trim from public services, no publicly owned companies to sell off (Oh, wait, there's Channel 4...).

No, it will not end well.

"Trickle-down economics - it's crap".

I saw an interview with a multi-millionaire some years ago.

He said the same.

He had no idea where his money was invested etc .. but he was sure that the poor weren't seeing any of it.

There is no north sea oil boom coming,

Yep.

Thatcher's 'success' was really driven by North Sea income.

The planned duty increase on alcohol has been cancelled.
I have mixed feelings about this. I fully support a reduction in the duty charged on DRAUGHT beer and cider, as these products are much greener than single use cans and bottles, and the pub trade is thereby helped a bit.
Not certain about the more general reduction though.

I cannot believe they've done this. I cannot find a single person who thinks this policy will work, and I can't even be bothered to ask them whether they think it is morally defensible. The only way I can make sense of it is that Truss and Kwarteng actually believe it will work -- that this will lead to a massive economic boom. But how can it work when inflation is already running at 10% and the pound is already collapsing, which makes importing food and fuel even more expensive? What is the Bank of England supposed to do? Truss and Kwarteng are trying to put a rocket under the economy, and the only tool the Bank has to keep inflation under control is raising interest rates, which just piles on even more mountains of debt.

It looks possible to me that we could be heading for a massive economic crisis next week.

It looks possible to me that we could be heading for a massive economic crisis next week.

Care to elaborate?

If you are right I need to buy a LOAD of stuff on Amerzon before my savings evaporate.

I sure am glad I took out some money from the UK three months ago to buy that electric car.

Seems like the economics of the madhouse is let loose amongst the UK government.

Pound getting close to parity with the US dollar (not the Aussie dollar sadly).

Remember this song from the 1980s?

The ammunition's being passed and the Lord's been praised
But the wars on the televisions will never be explained
All the bankers gettin' sweaty beneath their white collars
As the pound in our pocket turns into a dollar

My pound turned into 1.87 AUD a few months ago. Now it is 1.66 AUD.

Liz Truss has stuffed the Tories at the next election and I will be writing to my MP to ask her if she has a job waiting after the next election. She's a lawyer so she probably will have! Four adults in this household used to vote Tory but at the next election none will.

Inequality has just gone through the roof and trickle down economics never worked and never will.

In defence of trickle-down...

In Australia the pandemic effectively cut off the country with closed borders for a while and the labour market was frozen.

Complaints were made from farmers, employers etc about ''labour shortages''. The spectre of food shortages was raised in a country that produces between two and five times its food requirements.
Just recently we were seeing pay rises with the likes of Uber/meal delivery services starting to pay pension contributions and to stop treating their employees as ''entrepreneurs''/consultants/contractors and paying real wages.

... and then the borders were reopened.

I would say that trickle down works better in closed rather than open economic systems.

However introducing subsidies for fuel and cutting taxes for the rich while running deficits seems a bit mad.

Vortex2 wrote: ↑23 Sep 2022, 22:29

It looks possible to me that we could be heading for a massive economic crisis next week.

Care to elaborate?

Sterling could fall below parity with the dollar, forcing the BoE to raise interest rates and leading to widespread demands from people on the economic right for an immediate fiscal U-turn. I don't know how that scenario ends, but it won't be pretty.

UndercoverElephant wrote: ↑23 Sep 2022, 20:43

It looks possible to me that we could be heading for a massive economic crisis next week.

Doubt it.
I expect things to hold together until at least the new year.
Events that could trigger a crisis include.
Nuclear weapons used by russia, even if direct consequences for the UK are limited, a general feeling of doom is likely.
A severe worsening of the already tight fuel supply position.
Large scale civil disorder in the UK.
Large scale or reported power cuts in the UK. We have had power cuts before without serious consequences, but as with the other events listed, a general feeling of doom would spread.

,

UK now gone from having a bad prime minister to having a mad prime minister thoroughly
bought and owned lock, stock and barrel by the fossil fuel industry and finance. As events unfold not according
to plan expect her utterances and actions to grow exponentially more desperate and incoherent. She too will have
a poll tax moment or two.