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.

But no one's 'whole view' that it was crap was based on a few experts.

First, it was based on a fundamental unfairness and some obvious and predictable economic consequences. Then it was based on the catastrophe that it caused in terms of market confidence.

So your post is a straw man.

No one is opposing this budget just because some others are criticising it. They are opposing it because it is unfair and economically catastrophic.

I'd agree a bit with OP, it's a bit like changing a sub during a match and then getting upset that a goal is not scored immediately. Changes rake time to take effect.
Tax cuts allow for more spending and investment for businesses. In turn this stimulates the economy. People who earn more pay more tax anyway.
Raising interest rates will bring help bring a more steady growth and and also allow a buffer to either raise or low the rate to control the economy.
Having interest rates at rock bottom does not give any room for manoeuvre in the Bank of England for financial control.
Of course we've all enjoyed cheap credit and mortgages but let's be realistic, it was never going to last and interest has averaged 7% so a rise was inevitable.
Obviously all this coinciding with the Russian invasion and the issues with global energy supply is an issue but frankly at least it has woken the world up to the error of relying on energy supply mainly from one source. Hopefully this will make governments invest in better more reliable energy.
No doubt it's going to be a tough year but on the other side it will be worth it.

Except trickle down economics doesn’t work. Except in the minds of right wing Tory ideologues.

Congratulations for trying to open up a nuanced discussion and I agree with you op, there is every chance that these policies will stimulate growth and will stave off a deep recession.

Sadly you will be shouted down by the momentum thugs on here that are only ever happy running the country down and screaming into the abyss.

These people would never agree to 45% tax!!! Never, but they expect other people to pay it I definitely - they are welded to the socialist dream of redistribution because they have no assets, money, talent or ambition to earn their own. It’s known as theft elsewhere.

^Of course we've all enjoyed cheap credit and mortgages but let's be realistic, it was never going to last and interest has averaged 7% so a rise was inevitable.
Obviously all this coinciding with the Russian invasion and the issues with global energy supply is an issue^

Yes, do you think Liz hadn't noticed the Russian invasion and global energy supply when she decided to implement her plan? Given that her plan came after the invasion and energy crisis was well underway?

@specialcake

Germany's inflation rate is currently below 8%. The UK's inflation rate before Kwarteng's abysmal mini-budget was over 10% and increasing. Consumers will soon be feeling the real impact of Kwarteng's plans, but this will take a month or two to filter through.

Germany's economy is far more mixed than that of the UK. If UK services suffer a downturn there is little else to soften the blow.

Germany's particular issue at the moment is the reliance on gas from Russia, which has proven to be a very bad policy, but the overall economic strategy of having a mixed economy and designing and making things that people around the world actually want to buy has been far more successful over the last 40 years than the UK's dependency on shuffling money around (much of it from dubious sources) and taking a percentage out of every transaction.

@Havanananana

In order for the UK to join them, there needs to be investment in education, infrastructure, training, facilities and a shift from "services" to a mixed economy. There also has to be stability and accessibility to affordable housing, child care, elderly care and healthcare.

Agree with all this, which is why I'm looking forward to seeing what will be in the Planning & Infrastructure Bill, and more information on the investments planned for energy infrastructure (on/offshore wind, oil and gas, and shale) and road infrastructure, tax cuts for plant & machinery investment, incentives for UK science and technology businesses, etc.

I'm interested to see whether they can get a housing planning bill through. I think there will be resistance from constituents. But drastically cutting stamp duty was a clear positive for me in terms of affordable housing and getting people into the right houses for their life stage.

Anything that can shake off the shackles of Consumerism as the main socio-economic driving force is worth a try I think.

Sorry this doesn't make sense.

You're right that there's an argument that tax cuts = more investment = more economic growth. It's highly contested (to say the least).

But the elephant in the room is that you cannot pursue an inflationary fiscal policy and a deflationary monetary policy. The reason the markets took fright is

(a) the Government sacked the Treasury Perm Sec, refused to publish any sort of independent analysis of their plans - so the markets took fright that the Government was abandoning any prudence.

(b) the budget, with tens of billions of unfunded tax cuts, was going to fuel already bad inflation, necessitating higher interest rate hikes than would otherwise be necessary.

So the cost of borrowing skyrocketed (putting even more pressure on the public finances) and the pound devalued (putting even more pressure on inflation).

Also, sorry, but your claim that higher base rate can stimulate growth is nonsense. A higher base rate may be necessary to curb inflation (inflation now made worse by the Government) but it does not support economic growth.

That's why an economic policy that pursued conflicting aims (economic growth and curbing inflation) at the same time was roundly rejected by the markets.

These people would never agree to 45% tax!!! Never, but they expect other people to pay it I definitely - they are welded to the socialist dream of redistribution because they have no assets, money, talent or ambition to earn their own. It’s known as theft elsewhere.

Going by this logic and today’s polling 79% of the electorate are socialists now. Think you may need a more refined definition.

OP, can you provide an example of any country at all stage that adopted this policy and had a successful outcome directly associated with this approach?

All I'm looking for is the country and the time period? If you have evidence to support it that would be great but just looking for the example really.

The only way the budget will create affordable housing is if it causes a housing crash. Stamp Duty cuts won't achieve it, because all things being equal most of the benefit will be eaten up by a combination of the market inflating prices to account for any increased headroom by buyers and the fact that borrowers can afford to borrow less and will have higher repayments due to higher interest rates.

Now that might change if there is a major housing price crash - which I think would be necessary to reset the housing market but not sure it will have quite the economic benefits you're talking about.

You forgot C that it was very profitable for the markets to take ‘fright’ in some quarters…almost everyone in finance agrees it was an overreaction.

Interest hikes have been expected for months! Cheap credit falsely propped up since 2008 had to come to an end.

KK will in the coming days make a reassuring statement. The markets have already settled… next news story is on its way. I believe No 10 were fully expecting the hand wringing and even had the decency to tell us before hand that the new PM is not looking for friends, her job now is to resuscitate the economy.

Congratulations for trying to open up a nuanced discussion and I agree with you op, there is every chance that these policies will stimulate growth and will stave off a deep recession.

@Kissingfrogs25 But it isn't a nuanced discussion. Supporters of the budget have not explained how they think it will improve the UK's economy, nor have they explained why trickle down has failed every time that it has been attempted. Nor have they explained why every economist (with the possible exception of Minford, who has been wrong on all of his other theories) has explained why they think it won't work.

"I agree that there is every chance that these policies will work" is an opinion, not a nuanced argument. Many of the posters here have attempted to explain why we hold an opposing view, only to be met with insults ("momentum thugs").

These people would never agree to 45% tax!!! They are welded to the socialist dream of redistribution because they have no assets, money, talent or ambition to earn their own. It’s known as theft elsewhere.

And yet in many other European countries, taxation rates are higher than in the UK, growth over the last 40 years has been greater than in the UK and people are far from being "socialists". What they do realise is that a fairer distribution of wealth, opportunity, education, infrastructure, housing and healthcare is key to the success of any modern economy, and they are willing to pay for it because they can see the benefits that accrue to everyone.

I don’t think a housing market crash will happen - demand/supply - demand outstrips supply here by a huge margin. You can’t even rent a house - there is nothing available.

With regards to Housing the only solution I can see is to build 'Council Estates' again, rather than rely on Private Developers and inadequate s106/planning gain/CLS agreements which completely hasn't worked.

Yes the UK needs more homes - but lets build the most needed homes - Social/Affordable Housing is what is needed and immediate Prefabs in the interim; they last for decades longer than initially intended.

Nearly every UK town and village has a post war council estate/terrace/ cul de sac so it's really not a new concept at all.

KK will in the coming days make a reassuring statement.

He was supposed to make a reassuring statement at the weekend and instead said 'hey, there will be even more tax cuts next year' which did the opposite of reassuring.

The markets have already settled…

Because the BoE have spent billions of taxpayers' money trying to settle them.

My home country Singapore is pretty big on supply side economic policies,( low tax, low regulation) but it's also a city state. If you study a level economics in my home country, a huge part of the syllabus is devoted to supply side economics and how great it is, how Singapore is successful because of it etc

It's a completely different country. It's like as if inner London was a country as it's literally half the size of London. It also has no deficit and the government owns 95% of land and controls large swathes of the economy through its state owned company. One of the biggest sovereign wealth funds. As the state owns so much land, they can build subsidized housing that it sells to its citizens and even in past recessions, the value of the government housing did not go down as much as private housing as the prices are controlled by the government (given that the government has full control of the supply).

Deregulated/low tax policies tend to work in city states with a well educated population and a growing financial sector. The vast majority of the population can work in the financial sector/other well paid tertiary sectors and the government can afford to help the small number of people who don't.

You haven’t mentioned what countries in Europe tax over 45%

Secondly this isn’t trickle down! It never was. The government are trying to help unshackle the country of pointless regulation to attract more business, to ensure the very best legal minds, bankers, surgeons and entrepreneurs STAY in the U.K. by reducing their tax burden. In an increasingly competitive global market we need to be a low tax country that stands out from all the rest. Business friendly and attractive. That way we stimulate growth and investment.

Truss is taking the hard decisions no other PM has had the balls to follow through before now.

The alternative was a deep depression with a tanking economy and huge debts. She had no choice in my view

Excellent point.

I honestly don't know where to start.

1. Productivity is down due to lack of 'resource' because

a) a significant number of over 50s have been left with health problems over Covid and have left the workforce. b) a significant number of women have left the workforce due to a lack of affordable childcare. c) Brexit has cut off a significant source of labour.

1. The stamp duty cut will ultimately push house prices up.

1. More oil and gas?! Are you INSANE? Where are we getting this oil and gas from? The UK doesn't own our own gas we have to buy it on the open market. We are way past the point of burning any new fossil fuels being acceptable.

London is the financial capital of the world, and powers much of the U.K. in terms of revenue.
I think the low tax, low reg policy is perfect for the U.K. we are uniquely placed to take advantage of the benefits. I strongly believe this is precisely what we need to do - we have many assets as a country in science, law, tech, AI and research as well as finance.

I hope you will be happy to pay 45% tax in that case?

The rich are getting richer, the poor will get punished and poorer. Let them eat cake, huh.

Liz Truss on local BBC radio stations was absolutely and utterly humiliated by local radio hosts, especially on BBC Bristol. She just repeated the same lines, didn't answer questions, and it made her look utterly stupid.

People are angry because KamiKwasi's old Hedge fund buddies bet against the £ the Friday before he announced his mini budget, and they made 145% returns.

People are angry because it looks like the rich are getting richer, getting tax cuts and whatnot.

Whilst the poor are getting poorer, are being threatened to have their benefits slashed no matter the situation I.e disability, no suitable work, 0 hour contracts, and many other situations.

Food, fuel, energy, and water prices going up, I'm going to have to probably leave the job I'm doing now, the job that fits my disability fits around my studies where I'm trying to better myself, because I can't afford to live on £10 an hour. It's bullshit.

Trickle down economics is a fallacy, it doesn't work.

When bankers and trade unions agree on something you know something is really wrong.

We're going to have a winter of discontent, strikes, Demonstrations, and civil unrest. Cold hungry people aren't happy people, I think the UK is going to grow a pair and tell the government exactly what they think of them.

You know it's not 45% tax on all your income right...?