I'm actually pleased with the mini-budget

[yubgummy]

(Cue hysterical shrieking ;) )

Macroeconomics is complex. It surprises me that within a week, there's such a strong consensus that everything about the mini-budget is literally the work of the devil. Echo chamber...

The UK basically has never recovered from the GFC and has just been stagnant and struggling for a decade. The clear theme in this budget is encouraging people to actually get out and DO something ("supply-side reform"). Tax incentives for businesses to invest in plant & machinery, reducing red tape for infrastructure investment (more North Sea licences, more onshore wind), tax cuts to base rate & NI to encourage people into work...

I would like to see more action on interest rates from the BoE, and I would like to see more detail on the Planning & Infrastructure Bill, but I want to give them a chance instead of calling for yet another change in government. Supply-side reform is a perfectly sane strategy and the UK economy does need to get moving, by which I mean, producing new and useful goods and services not just keeping the whole country on life support.

Interest rates have been too low for a very long time, & we probably need a housing crash to bring prices down, so OP is not unreasonable.
Also, the economic situation was very similar in the early 1980s, & we went on to have a strong economy for most of the decade, so the current hysteria is probably a bit misplaced.
The reality is that everything will shake out eventually - history tells us that, at least.

I agree that OP's take on this makes no sense but can we please stop with all the "time for your meds", "proof the drugs don't work" type comments? As someone who lives with an actual Mental Illness it's not great seeing it used as a jokey insult. Also even those of us who are actually mentally ill and take meds can see that this mini budget was a total and utter disgrace so I'd rather not be lumped in with the OP, thanks! 😂

It's so bloody cathartic to see Truss's supporters railing against the media/the IMF/the heft of the financial markets/the imperfectly-informed perspective of ordinary voters. Given that these were exactly the same factors that they gleefully used to turf out Gordon Brown and justify austerity using a bunch of extremely contentious economic arguments.

I never actually expected this day to come but boy, am I enjoying it. Live by the sword, die by the sword.

I think it could be good if the current economic climate wasn’t so difficult already. If inflation was stagnating, interest rates were low and we weren’t booming then sure, encouraging the wealthy to invest more could be a not terrible policy. So maybe, say, 5 years ago this may work.
But now? whilst inflation is out of control and interest rates are rising quicker then expected, the cost of fuel and therefore food etc is rising with unprecedented speed - erm terrible policy!! No one is going to invest right now, it’s all about buckle up, hold on to your hats and brace yourself for a bumpy ride. Keep hold of every penny you can because the future is suddenly very uncertain.

I think the fact that every expert has had to come out and criticise the plan just goes to show how truely awful it is. I just hope those that back Truss instead of Sunak are content with this on their conscience

It’s really shit to respond to OPs attempt at reasoned debate with comments like ‘are you off your meds’ and that Jesus crap.

For what it’s worth, there are sound economic arguments for policies such as these. However, it is a very big risk and the budget being in costed is a problem.

And before anyone shouts me down, my politics are left wing, I never have and never will vote Tory. However, I am a qualified economist (PhD) and have been working in government as an economist for the last 10 years.

www.instituteforgovernment.org.uk/blog/kwasi-kwartengs-new-era-economic-policy-major-gamble

This bunch think it's a big gamble at best. We should never forget whose money they're gambling with.

Don't remember being asked at a ballot box if I was up for gambling away my money to make some overseas asset strippers rich (er).

I'm pretty sure I would have declined the 'opportunity'

As far as I can make out, Truss believes that:

To encourage the already rich, you have to pay them more.
To encourage the already poor, you have to threaten to make them poorer.

As for cutting taxes to promote investment, here is what Badenoch told American investors yesterday:

The Trade Secretary was set to show Britain's attractiveness to US investors by stressing that corporation tax would be kept at the lowest in the G20, at 19 per cent.
She was emphasising that level is "not cutting … keeping".

So she's admitting that even though the UK already has the lowest rate of Corporation Tax in the G20, this has not been sufficient to attract internal or international investment. Why would that be? Because the UK has put up barriers to trade with the largest, wealthiest and most standardised market on the planet - located just 22 miles away? Because UK infrastructure is crumbling after 50 years of neglect? Because the overseas investors can't see how the UK is any more attractive than so many other places, as it is lacking skilled labour, affordable housing, a health service that is on the point of collapse. Not forgetting a government that does not keep it's promises or even abide by international agreements, with a justice secretary, a qualified lawyer, who believes that it is alright to break international law in a specific and limited way?

OP do you have a fixed rate for your mortgage that’s up for renewal soon? Or a pension that you’re about to start to collect?

If not, would you still be happy with the mini budget if you did?

Trying to dodge OBR scrutiny seems to have been a big problem here. Makes you look like you've not done the sums and are trying to blag it.

100% agree with you OP.

I honestly have no idea why everyone is saying it's bad... unless you're on benefits - because then you're not getting any increases.

But for working class people, they're getting more money in their pockets from their wages in November with the National Insurance cut, and then even more in April from the Tax cut - how is this not a good thing?
Do you know what this then leads to? People spending more money at shops, meaning employment goes up, businesses are making more money, businesses can afford to pay their staff more, the government makes more in tax/VAT, the economy goes up. It's a big circle.

Plus, a much better deal on stamp duty, which is only going to promote the buying and selling of more houses, making the fees lower for those who need to upgrade, and potentially continuing the rise in house prices due to the constant buying demand. It also means a lower LTV for everyone whom already has a mortgage, potentially reducing their interest % when remortgaging.

Everyone saying "OMG look what the budget did to the GBP" - the £ has been dropping steadily for the last 12 months, check the graphs. It had already dropped approx 22% in the last 12 months. 18% of which was BEFORE the mini budget. So really, the GBP only dropped 4% following the mini budget.

This is so offensive.

I think that’s the point. OP is looking at a bigger picture, while everyone else is looking at their own personal circumstances.

I would’ve left rates and increased thresholds so that those on minimum wage (full time) pay no income tax or NICs, moved up the 40% banding start to c£80k to encourage spending by the “ squeezed middle “.

The majority of £150k+ earners accumulate cash, reducing 45% band will encourage them to accumulate - not spend - more.

I’d have kept all his business tax changes though (other than employer NIC reduction).

My budget would’ve been more expensive than Kwasi’s, I imagine, but it would have done better to encourage the desired behaviours.

I’m assuming that the OP is capable of looking at the ‘bigger picture’ because they’re not worried that they might lose their house.

Shame on those fixating on personal circumstances like that, eh?

So everyone critical of this mini budget is stupid?

But for working class people, they're getting more money in their pockets from their wages in November with the National Insurance cut, and then even more in April from the Tax cut - how is this not a good thing?

It’s not going to be in their pockets though, is it? It’s going to be spent on the same things they were buying before, that are now way, way more expensive.

It’s going on bread, milk and heating (if they’re lucky) not cars and fancy holidays.

Hysterical according to the OP, but be nice to them

😂

In seriousness, I think one major source of anger is that LT and KK are doing this highly risky and ideological stuff (and it is) at a time of crisis, without any kind of proper mandate, because 80K Tory party members is not one.

You must be related to KK or his partner.

It's not "within a week". Truss was trailing this during her leadership campaign, and everyone who knew anything about economics told her it would tank the pound and cause interest rate rises, but she refused to accept it. Lo and behold, it has tanked the pound and caused interest rate rises.

I note OP doesn't mention the unfunded personal tax cuts or the lack of OBR analysis that has been cited as the main trigger for the market turmoil (as well as the Chx's well-chosen words over the weekend...)

Funny that. That's the stuff that's now driving up the cost of the energy support package (both through borrowing costs and the costs of wholesale energy), that nearly saw pension funds crash yesterday, that's driving up the cost of servicing government debt....

Why so shy, OP?

Supply side reforms only work without a huge deficit and high inflation. Fix the high inflation and the deficit first. Timing is everything.

@andymary But for working class people, they're getting more money in their pockets from their wages in November with the National Insurance cut, and then even more in April from the Tax cut - how is this not a good thing?
Do you know what this then leads to? People spending more money at shops, meaning employment goes up, businesses are making more money, businesses can afford to pay their staff more, the government makes more in tax/VAT, the economy goes up. It's a big circle.

The £8 a week more that working class people are getting in their pockets has already been wiped out by the increases in the price of fuel and imported food (as Kwarteng has caused the value of the pound to collapse), the increase in mortgage payments (again down to Kwarteng) and the decrease in the value of any pension savings (which means not only has your current income been reduced, but so has your future income).

As for the general circulation of money, which is what you're referring to:

Pensioners and people on fixed incomes, which is most of the public sector, will definitely not be getting higher wages (on the contrary, they will see a net fall in the real value of their wages and payments) so they will spending less in the shops as more money goes on fuel and rent or mortgages.

Wealthy people already earning more money than they need will not be spending the money in the UK. Instead they will take another holiday abroad (which means money leaves the UK "big circle") or upgrade their foreign-made car (= money leaves the UK) or buy more consumer goods (TVs, tablets, phones, fridges etc) few of which are made in the UK (= more money leaving the UK). Or they will simply stash the money away for a rainy day or invest it in another house from which they can earn rent, thus inflating the housing market.