NEWS · 28 September 2022
Liz Truss has only been in office for three weeks and already she has caused an economic crash.
Chancellor Kwasi Kwarteng's 'mini-budget' – which cut taxes for the richest and paid for it with a sharp increase in state debt – sparked a massacre in the markets. The pound plummeted to an all-time low.
Last night even the IMF intervened, warning the UK government that it should "reevaluate the tax measures, especially those that benefit high income earners". They do not do this lightly.
The basket-case British economy has lost $500 billion (approx, er, £500 billion) since Truss' first day.
It may all sound technical, but we will all feel it in our pockets. Mortgage interest rates will soar. Inflation will go up further. Most of Britain's food is imported – it will now cost even more.
Worst of all, this is no accident. Truss and Kwarteng have been consistently committed to their ideology since they wrote the book Britannia Unchained a decade ago. This is about what happens when fantasy economics collides head-on with reality.
'Doomsday cult'
Normally-sober financial analysts have strong words for these bizarre moves from the UK government.
"Investors seem inclined to regard the UK Conservative Party as a doomsday cult," said Paul Donovan, chief economist at UBS. Perhaps there is something in this when we see that Tory donors have been making millions from shorting the pound.
Behind all of this is not just one or two bad policies, but the slow fall of the UK out of the 'big league' of economies since Brexit.
One theme in economic commentary has been that the UK now resembles what they call an 'emerging market' – that is, an economy in the process of developing. Except, as former US Treasury secretary Larry Summers pointed out, the UK is not 'emerging', it is going in the opposite direction: "turning itself into a submerging market".
Predicting that the pound will fall below the dollar, he said: "Between Brexit, how far the Bank of England got behind the curve and now these fiscal policies, I think Britain will be remembered for having pursuing the worst macroeconomic policies of any major country in a long time."
There is only one way for the UK to fix its economy, and that is to get rid of this Brexit government and rejoin the EU.
The Rejoin campaign starts here
Have you heard? We are no longer Remainers. We are Rejoiners!
That's an important transition for our movement to make. We're still going to highlight the daily disasters of Brexit – but Rejoin is also about making a positive case, about a renewed Britain in the EU.
The launchpad for that campaign will be the National Rejoin March – which is now on Saturday 22 October.
Brexit is the cause of our problems – and it gave us this disastrous government. Now is the time to put Rejoin on the agenda. Find out more here:
