Liz Truss and the Conservative Party.

[DelayRepay]

Osborne’s austerity was criticised for choking off the recovery from the financial crisis. Sunak’s tax rises could likely have had a similar effect.
What are derided as Trussonomics is relatively normal Keynesian economics. Borrow and spend to promote growth when the economy is depressed (which it is post-COVID), then retrench once things have improved.

Borrowing to spend on infrastructure is sensible, if that infrastructure will generate growth (and in times of unemployment, move people from unemployment benefit to earning a wage building the infrastructure). But this borrowing is not being spent on infrastructure. It's just being given away willy-nilly.

 

[jon0844]

Claims of insider trading are mostly the fevered dreams of people like Jolyon Maugham. Liz Truss cutting taxes was hardly a state secret. The offences related to insider trading only apply to financial instruments such as shares, not currency trading.

I agree it isn't illegal to 'speculate' on the currency market, but let's be honest - the optics aren't great when some people made an absolute killing after the referendum result and now this budget announcement. It is so brazen too, which is why we know they're laughing at us.

 

[brad465]

Claims of insider trading are mostly the fevered dreams of people like Jolyon Maugham. Liz Truss cutting taxes was hardly a state secret. The offences related to insider trading only apply to financial instruments such as shares, not currency trading.

I don't recall The Sunday Times having "fevered dreams", who quoted "They were all supporters of Liz Truss and every one of them was shorting the pound":

https://twitter.com/HarryYorke1/status/1573724027776122884

A source who was present at a dinner attended by hedge-fund managers a week ago revealed: “They were all supporters of Truss and every one of them was shorting the pound.” How the 'Biscotti Budget' came to be, w/ @ShippersUnbound & @cazjwheeler

‘Biscotti mini-budget’ exposes gulf between Liz Truss and Keir Starmer — and more tax cuts are on the cards

Most people visiting Greenwich early last month were tourists, lazing in a park parched dry by the summer heatwave, sweating their way up the hill to the observ

t.co

 

[najaB]

What are derided as Trussonomics is relatively normal Keynesian economics. Borrow and spend to promote growth when the economy is depressed (which it is post-COVID), then retrench once things have improved.

And what current spending is going to promote growth? I don't remember hearing that it will be spent on large new transportation projects, new universities, research into new technology, etc.

 

[DC1989]

And what current spending is going to promote growth? I don't remember hearing that it will be spent on large new transportation projects, new universities, research into new technology, etc.

Because all the 150k+ earners are now going to start new businesses and hire millions of people thanks to their tax cut

 

[brad465]

The pound has recovered almost all lost ground on earlier today, but this is believed to be due to the expectation of an emergency interest rate rise to try and shore it up. Any homeowners with mortgages will not be pleased if they see their mortgage costs go up as a direct result of Government policy, including their supporters.

 

[Bletchleyite]

The pound has recovered almost all lost ground on earlier today, but this is believed to be due to the expectation of an emergency interest rate rise to try and shore it up. Any homeowners with mortgages will not be pleased if they see their mortgage costs go up as a direct result of Government policy, including their supporters.

It's fairly likely it'll eat any tax savings...

 

[Typhoon]

Because all the 150k+ earners are now going to start new businesses and hire millions of people thanks to their tax cut

???

Unfortunately, in the real world, the beneficiaries are more likely to live in Lichtenstein, Mauritius or Cyprus. At least the Northern Ireland voucher and 'Eat Out to Help Out' actually benefitted businesses in the UK!

 

[brad465]

Something that's also come to mind is 10 days ago was the 30th anniversary of Black Wednesday. I wasn't around at the time but I wouldn't be surprised if what we're currently seeing is comparable to that in terms of currency damage and in particular political consequences.

== Doublepost prevention - post automatically merged: 26 Sep 2022 ==

Sky are reporting that letters of no confidence are already being sent (and the use of expletives suggests real discontent):

Politics latest: Starmer refuses to say he spoke to Mandelson before ambassador appointment

The prime minister dodged questions from Kemi Badenoch during PMQs when asked about the process of making Mandelson the UK's ambassador to the US.

news.sky.com

Liz is 'f*****' - former minister claims letters of no confidence already being submitted against the PM​

The disquiet with Conservative MPs over the mini-budget is growing.
One Tory MP who served as a minister under Boris Johnson has told Sky News: "Liz is f*****."
"She is taking on markets and the Bank of England.
"Her, Kwasi, Philp and Simon [McGee] are playing A-level economics with people's lives. You cannot have monetary policy and fiscal policy at loggerheads. Something has to give."
The source also claimed moves to trigger a vote of no confidence in Ms Truss's leadership were already underway:
"They are already putting letters in as think she will crash the economy. The tax cuts don’t matter as all noise anyway - mainly reversing back to the status quo this year.
"The issue is government fiscal policy is opposite to Bank of England monetary policy - so they are fighting each other. What Kwasi gives, the Bank takes away."
Another Tory MP told Sky's Rob Powell that Friday's announcement had been a "s***show".
The MP said they weren’t aware of any coordinated plan to vote down government legislation or take other action to show concern, but added they would not rule out something happening given the events of the last few days.

 

[dosxuk]

Well yes but i thought they'd at least get to October before the first crisis

The impressive bit is that with the Queen passing, they're pretty much still in single figure number of days they've been able to do things.

It's clear that either there's going to be an almighty u-turn in the coming days or a rash of resignations. The comments made yesterday about further tax cuts seem to have gone down even worse than the mini-budget - I can't actually understand who they were aimed at if the intention was to calm things down.

 

[DelayRepay]

The pound has recovered almost all lost ground on earlier today, but this is believed to be due to the expectation of an emergency interest rate rise to try and shore it up. Any homeowners with mortgages will not be pleased if they see their mortgage costs go up as a direct result of Government policy, including their supporters.

UK Finance say that 74% of mortgages in the UK are fixed rate, so in the short term there will be no impact. However, as these rates expire people are in for a massive shock. I am lucky that my rate is fixed at 1.4% but am worried about how much I will be paying when my rate expires in 2025. And for many, their fixes will expire before then.

I was planning to over-pay my mortgage but as things stand I am better off keeping the money in my savings account until the fix expires.

 

[brad465]

The impressive bit is that with the Queen passing, they're pretty much still in single figure number of days they've been able to do things.

It's clear that either there's going to be an almighty u-turn in the coming days or a rash of resignations. The comments made yesterday about further tax cuts seem to have gone down even worse than the mini-budget - I can't actually understand who they were aimed at if the intention was to calm things down.

Going by previous reports, if "pound-shorters" with connections to Government are active as is being reported, the comments are aimed at them.

 

[jon0844]

???

Unfortunately, in the real world, the beneficiaries are more likely to live in Lichtenstein, Mauritius or Cyprus. At least the Northern Ireland voucher and 'Eat Out to Help Out' actually benefitted businesses in the UK!

No surprise that the biggest beneficiaries were the big chains (many owned by hedge funds) and not the smaller establishments that had to jump through so many hoops to apply.

 

[Yew]

What are derided as Trussonomics is relatively normal Keynesian economics.

But we are not spending, we are cutting taxes for the wealthy. Sure some of them might use some of their cuts to invest in British businesses, but using it to fund business loans or direct investment would be much more effective at doing that.

This is more akin to later Roman emperors offering unsustainable pay rises to the Pretorian Guard, than any sensible economic policy.

 

[Bletchleyite]

But we are not spending, we are cutting taxes for the wealthy. Sure some of them might use some of their cuts to invest in British businesses, but using it to fund business loans or direct investment would be much more effective at doing that.

This is more akin to later Roman emperors offering unsustainable pay rises to the Pretorian Guard, than any sensible economic policy.

Not just for the wealthy. Stamp duty affects regular families and the 19% income tax rate will benefit everyone.

On the other hand, pushing up the personal allowance and borrowing to build infrastructure (HS2 anyone?) would be better as a stimulus.

 

[birchesgreen]

UK Finance say that 74% of mortgages in the UK are fixed rate, so in the short term there will be no impact. However, as these rates expire people are in for a massive shock. I am lucky that my rate is fixed at 1.4% but am worried about how much I will be paying when my rate expires in 2025. And for many, their fixes will expire before then.

I was planning to over-pay my mortgage but as things stand I am better off keeping the money in my savings account until the fix expires.

26% of mortgages is still going to be a lot of people. Plus some of the 74% will be ending all the time and they won't get as good a deal when they come to renew.

 

[Typhoon]

Not just for the wealthy. Stamp duty affects regular families and the 19% income tax rate will benefit everyone.

On the other hand, pushing up the personal allowance and borrowing to build infrastructure (HS2 anyone?) would be better as a stimulus.

most people! (Some people don't pay income tax).

Income of £15k - benefit of £24.30 per annum, gee thanks, Kwasi!

 

[Bletchleyite]

they won't get as good a deal when they come to renew.

It's worth thinking back to about 2005 before all the subprime nonsense kicked off. Generally rates on offer were similar to what they are now - trackers for instance tracked at BoE rate *minus* something if you had decent equity. When rates crashed, there were all manner of legal cases with people arguing they should be paid by the bank for borrowing as BoE minus whatever was below zero.

Thus, once rates settle back to a sustainable level, maybe 4-5% or thereabouts, what banks offer will take that into account. Those of us on trackers (like me) may want to keep an eye out for improved ones as are likely to start appearing - usually a tracker isn't fixed in for any period of time so you can flip between them as often as you like. You can also fiddle about in other ways - for instance when I last did mine I shortened the term by 5 years because rates were low. Next time I'll probably lengthen it back a bit so as to reduce the monthly payment.

Mortgages generally have a lot of flexibility, it's not like a personal loan where you agree the rate at the start and that's it.

 

[AlterEgo]

Letters of no confidence continue to arrive at the 1922 Committee, according to various outlets today. Completely bonkers government, which has totally imploded. Unfit to be in power.

 

[Bletchleyite]

Letters of no confidence continue to arrive at the 1922 Committee, according to various outlets today. Completely bonkers government, which has totally imploded. Unfit to be in power.

This concerns me, as Boris was scheming his return...

A GE is what is needed. Though Sunak would have done!

 

[AlterEgo]

This concerns me, as Boris was scheming his return...

He would have to be elected by the membership, etc etc etc. I can’t really take much more of it to be honest. Pathetic all round. They should be run out of office.

 

[yorksrob]

Osborne’s austerity was criticised for choking off the recovery from the financial crisis. Sunak’s tax rises could likely have had a similar effect.
What are derided as Trussonomics is relatively normal Keynesian economics. Borrow and spend to promote growth when the economy is depressed (which it is post-COVID), then retrench once things have improved.

Wasn't the Keyensian idea to borrow to spend on infrastructure and industrial investments to bolster the economy, rather than questionably focused tax breaks ?

 

[Bletchleyite]

He would have to be elected by the membership, etc etc etc. I can’t really take much more of it to be honest. Pathetic all round. They should be run out of office.

It does all feel like the last end of the Tories, doesn't it? They do need a few years out of power now I think.

 

[Howardh]

Letters of no confidence continue to arrive at the 1922 Committee, according to various outlets today. Completely bonkers government, which has totally imploded. Unfit to be in power.

In which case they could remove Truss, but could she stand for re-election via the members? In truth it would probably be a Johnson/Sunak choice, if the MP's want Sunak but the members what Johnson, we are still in the same situation. Johnson would be highly unlikely to promote Sunak back to chancellor?

Think if Truss were dismissed and a new leader put in place, we would have to be in general election territory. They couldn't bluff their way out of that one "you don't know what you're doing" to quote a football song!

 

[najaB]

Not just for the wealthy. Stamp duty affects regular families and the 19% income tax rate will benefit everyone.

Stamp duty changes only affect those who are buying/selling houses. So, for the average family, maybe once a decade?

 

[Bletchleyite]

Stamp duty changes only affect those who are buying/selling houses. So, for the average family, maybe once a decade?

True, and it's a small sum, but it is a tax on workforce mobililty and on "rightsizing", so I am strongly in opposition to it other than for second homes, investment properties and very high value homes (say £1m +*). We need to make selling/buying houses easier and smoother, not tax it. If we want to tax property it should be on ownership, not on transactions.

* Which is what SD *was* - they failed to increase the thresholds each year in line with price growth and so we have ended up with it applying to the vast majority of homes, even say small 2 bed terraces.

 

[JamesT]

In which case they could remove Truss, but could she stand for re-election via the members? In truth it would probably be a Johnson/Sunak choice, if the MP's want Sunak but the members what Johnson, we are still in the same situation. Johnson would be highly unlikely to promote Sunak back to chancellor?

Think if Truss were dismissed and a new leader put in place, we would have to be in general election territory. They couldn't bluff their way out of that one "you don't know what you're doing" to quote a football song!

If a Conservative Party leader loses a no confidence vote they can’t stand in the following leadership contest.

I think a challenge is relatively unlikely in the near future, even if the pound does fall to parity. Ditching a leader after a matter of months looks really incompetent, even if they’re useless. Perception is everything in politics.

 

[najaB]

I think a challenge is relatively unlikely in the near future, even if the pound does fall to parity. Ditching a leader after a matter of months looks really incompetent, even if they’re useless. Perception is everything in politics.

Letters have, apparently, already been submitted.

 

[birchesgreen]

I think a challenge is relatively unlikely in the near future, even if the pound does fall to parity. Ditching a leader after a matter of months looks really incompetent, even if they’re useless. Perception is everything in politics.

Months? Days you mean.

 

[JamesT]

Letters have, apparently, already been submitted.

Months? Days you mean.

The first letters for Boris allegedly were submitted after Cummings jaunt to Barnard Castle in May 2021. There weren’t enough for a vote until June 2022.