Britain’s new finance chief reverses prime minister’s economic policies

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Britain’s brand new finance minister, Jeremy Hunt, on Monday said that the government would not slash taxes but would instead see them rise, in a stunning reversal of trickle-down growth policy announced just three weeks ago.

“Truss has wrecked the Conservative Party’s reputation for fiscal competence and humiliated Britain on the international stage. Senior Tories must now act in the national interest and remove her from Downing Street as quickly as possible,” declared an editorial in the Sunday Times that also called Hunt the “de factor prime minister.”

A poll by Opinium showed that if there was an election today, the opposition Labour Party would win a landslide with 411 seats, compared to the Conservatives with just 136. But in a sign of the emotion of the moment, she dredged up Winston Churchill’s warning to the British people at the start of World War II that the future would hold “blood, toil, tears and sweat.”

Last week, the government reversed its plan to cut corporate tax and will now allow the rate to increase from the current 19 percent to 25 percent in April 2023. Many now are asking what is the point of Truss if Trussonomics — her main pitch was to be the leader who lowered taxes — is all but dead.But as the Tories will have noted by now, switching out leaders is no guarantee that they will get a boost in the polls.

 

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That certainly is a good way to increase confidence in your government. Tell them you have a policy. Three weeks later, tell them you have a different policy which is 180° different from the policy you just had three weeks earlier. Good grief.

All governments will follow suit. Brits are just the first. It's either fight inflation with a depression and more inflation (higher but not high enough interest rates) or have a lot more inflation and everything crashes worse, but later (keep negative real interest).

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