Chaotic start to Liz Truss’ tenure is discrediting her on the eve of Conservative conference
The UK Labor Party would get 51% of the vote in an election now being held and the Conservative 21%, according to a survey published by the firm YouGov of 1,700 citizens. At the time of Boris Johnson’s resignation, Labor’s lead was 9 points. Prime Minister Liz Truss said after her election as leader she will call elections in 2024.
Capital markets have declared a truce to the British treasury following the intervention of the Bank of England, on Wednesday, which ended a spiral that some believe was close to the spiral that culminated in the 2008 bankruptcy of Lehman Brothers. In this case, the central bank has prevented a possible bankruptcy of private pension funds.
The most widely held opinion is that the cause of the whirlwind – in addition to the multiplication of risk, as in 2008, through financial derivatives, popular in fund management over the last decade – was the presentation by the Minister of Finance, Kwasi Kwarteng, of a mini-budget that included subsidies and tax cuts without presenting an income or savings card.
The British government has prompted Theresa May’s painful management after ‘Brexit’ to negotiate the EU’s departure with a parliament in which a majority was in favor of permanence and then the disorder caused by a leader, Boris Johnson, extremely narcissistic. The first steps of Kwarteng and Truss, co-religionists of libertarian conservatism, as well as friends and neighbors, are shocking.
On Friday morning, three members of the Office of Fiscal Responsibility, created twelve years ago to audit the state’s general accounting system, were received in Downing Street, with forecasts unbiased by partisan interests. Kwarteng and Truss ruled out that their mini-budget required an OBR report, they also said there was no time to produce one.
The parliamentary committee that analyzes Treasury policy warned on Thursday that the OBR did have a report ready for publication a few weeks ago. That announcement was followed by the meeting. There had never been an official meeting of prime ministers with this independent entity. It was later announced that the OBR will deliver the report to the government on October 8, but it will be published on October 23. The pound fell after the meeting.
The rush to announce tax cuts, especially for the richest, has cost pension funds undisclosed sums and forced the Bank of England to change course, which this week wanted to begin withdrawing bonds that had been on its balance sheet and grown since 2008. during the pandemic. His new bond purchase could now fuel more inflation.
The beginning of Truss’s mandate evokes the “Black Wednesday” of September 16, 1992. John Major’s government had to remove the pound from the European Economic Community’s exchange rate system after raising interest rates to 15% in an effort to halt this decline in the currency. With nearly five years to go before the election, the Conservatives had lost credibility in economic governance and, deeply divided after the overthrow of Margaret Thatcher, were overwhelmed by Tony Blair’s Labor Party.
Truss needs to act urgently as her promise to reverse a stagnant economy and achieve growth she has set at 2.5% a year is to be delivered within two years. His first step has unfortunate consequences for his plans. The Conservative Party’s annual conference begins on Sunday. The leader will answer in what is usually a rhetorical feast, with triumphant speeches and ridicule from rivals.
Source: La Verdad
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