There’s rarely a quiet day in UK politics at the moment but this week has been particularly intense. The repercussions of Kwasi Kwarteng’s mini-budget, announced this time last week, are still being felt all over the country.
The mini-budget outlined plans to cut the taxes of the highest earners by 5% and by 1% for those earning between £12,571 and £50,270 per year. Additionally, the national insurance rise of 1.25% was scrapped and the threshold for paying stamp duty was doubled so that nobody buying a house worth less than £250,000 will have to pay stamp duty anymore.
The budget is estimated to cost around £45bn, with the government set to borrow significant sums of money to pay for it. As a result, the value of the pound plummeted to an all-time low against the dollar earlier in the week – albeit it has now marginally recovered.
Another significant repercussion of Kwasi Kwarteng’s budget is the expectation that the Bank of England’s interest rate will soar. This prompted a statement from the IMF, who slammed the UK government for a budget which they suggested promoted inequality and did nothing to help those who needed it.
Shortly after the announcement of the budget, rumours started to swirl that some Tory MPs had already sent in votes of no confidence in the Prime Minister, Lizz Truss. Some people have even started to wonder whether Truss will become the shortest serving Prime Minister of all time.
With the heat well and truly on her, and her Chancellor, Truss conducted a series of local radio interviews on Thursday to defend the budget. The interviews were, at times, brutal but Truss was given the opportunity to outline why she plans to follow through with the plans. In her interview with BBC Radio Leeds, she said:
“We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.
“Of course, that means taking controversial decisions but I am prepared to do that as Prime Minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen.”
When pushed by BBC Radio Norfolk to outline whether she would be sticking with the plans set out in the mini-budget, Truss said:
“This is the right plan that we have set out. This is about making sure people are going into the winter not worried about high fuel bills, which is what we were looking at.
“It was simply unconscionable that we could have allowed that to happen.”
Kwasi sticks to his guns
Kwasi Kwarteng has also faced calls to go since the announcement of the mini-budget, however, he is also doubling down on the plans outlined last week. In a meeting with local businesses in Darlington yesterday, he said:
“We are sticking to the growth plan and we are going to help people with energy bills. That’s my two top priorities.”
“Without growth, you’re not going to get the public services – we’re not going to generate the income and the tax revenue to pay for the public services that we want to see.
“That’s why the mini-budget was absolutely essential in resetting the debate around growth.”
After issuing a series of warnings about what they might have to do in light of the current economic situation, the Bank of England announced a £65bn bond-buying programme on Wednesday.
The programme will involve the BoE spending £5bn a day for 13 days on long-dated bonds. This move will aim to calm the financial uncertainty in the country and prevent another crisis.
The reiteration from Truss and Kwarteng that they are going to stick with their mini-budget certainly hasn’t gone down well with the vast majority of the country. The latest voting intention polls from Westminster have seen Labour open up an unprecedented lead over the conservatives, just emphasising how little trust the British public now has in the Conservative Party.