Indeed. She was told that her budget last year would quite obviously harm growth and which addressed none of the underlying issues in order to offset this, would create a doom loop of further economic decline meaning lower tax revenues meaning another hole in the budget due to rising spending and falling tax revenues. For someone who has an economics degree she seems to have a minimal grasp of even the most basic concepts of how an economy works.
The bond markets were prepared to show her a great deal of goodwill, recognising the difficult situation she inherited. What they needed to see, however, was a credible plan for how to improve the situation.
Prior to the election she constantly stated that the only way to fix the problem was to create growth. This was correct because the only way to raise living standards sustainably is to increase productivity not rob one group of people and redistribute to another, and these statements were why she was given a great deal of goodwill to give her time to implement the policies to start this process. She has, in reality, taken not one measure that will have any statistically significant impact on increasing growth and many, many measures that will reduce it further, and thrown away all of this goodwill in just over a year. Idiotic.
The solutions are obvious and some (like removing cliff edges in the tax system which have been shown to be harming productivity) are entirely within Government control and would have an almost instantaneous effect. For example, the IFS calculated that if you raised the higher rate tax threshold to £75k, abolished the withdrawal of the personal allowance at £100k and made the higher rate tax threshold 45% from £75k upwards this would be fiscally neutral in immediate cost and remove huge economic distortions, increase workplace participation, lower skills shortages and the need for immigration to fill highly-skilled roles, reduce emmigration of our highest tax-payers, and therefore raise overall tax revenues and reduce public spending costs significantly.
Yet she isn’t doing this. Why? It’s extremely disingenuous to tell us that she “has to make hard decisions” when she’s not even making the very simple, easy, obvious ones that would mean that the gap she’s created between tax revenue and spending would decrease substantially. And in terms of longer-term plans, without investment in infrastructure and education and removing self-imposed trade barriers she has no hope whatsoever of growth increasing. How does she think this will happen? Unicorns nearly as large as the ones Mr Farage has been feeding with miracle grow.
Why do we have to have such incompetent people in these positions with seemingly no ability whatsoever to see the big picture or comprehend the obvious behavioural effects and consequences of their actions? The doom loop will continue until we have some grown ups in charge and these certainly are not, but sadly all other options at the moment seem even worse. The doom loop will cease to be a spiral slide and become a sheer drop like jumping from a plane with no parachute if we end up with Reform in charge, with no hope of reversal. Depressing in the extreme.