Will Truss turn Britain into "Caracas-on-Thames?"

 

"Useful Idiot" - Kamikwasi Kwarteng

Among the hedge-fund dealers and City slickers in London, who short the pound and British stocks and shares, the Chancellor of the Exchequer, Kamikwasi Kwarteng, is known as the 'useful idiot'.

In the aftermath of his mini-budget, the pound fell below $1.09, its lowest rate since 1985 and borrowing rose by the most in a single day, for at least a decade. The Bank of England had to take emergency action by setting aside £65bn, to buy bonds (guilts), to halt a run on pension funds.

Mortgage costs are now rocketing and its become more difficult for would-be homeowners, to get a mortgage. Kwarteng's mini-budget, along with his decision to sack the permanent secretary of the Treasury on his first day in the job and to sideline the Office for Budget Responsibility (O.B.R.), spooked both the markets and investors.

Although Truss says she won't cut public spending to pay for tax cuts for the wealthy, or reverse the mini-budget, the markets are curious as to where the money is coming from to pay for it.

It's now being predicted that Truss will scalp welfare spending and slash public spending to try and regain market confidence and to pay for her tax cuts for the wealthy. Simon Clarke, the Minister for levelling up, has said there will have to be significant cuts to public spending to pay for this cash bounty for the better off. Clarke says the UK's "very large welfare state" amounts to a "fools paradise", and needs to be trimmed back.

Some commentators like George Monbiot, believe that Truss and Kwarteng, are in the pockets of the hedge-fund dealers, the rich and powerful, and are just the mouthpiece in Parliament, for neo-liberal think-tanks like the Institute for Economic Affairs (IEA) and the Taxpayers Alliance.

The Economist magazine seems to think that unless Truss changes course, she could turn Britain into "Caracas-on-Thames." In the October issue of the magazine, they wrote: "In the first few weeks the new government has shredded its own reputation, unleashed higher inflation, forced emergency action from the central bank, and made growth harder. Just imagine what it can do in a month or two." (How Not To Run A Country - Liz Truss's government may already be dead in the water - Economist, 1st October to 7th October, 2022).