Kwarteng has stuck his middle finger up at austerity Osborne
IN May 2010 the outgoing Labour Chief Secretary to the Treasury Liam Byre left a note saying there was no money left. Of course Gordon Brown, Labour chancellor of the exchequer, sold 401 tons of gold while the price was at rock bottom a decade before.
Another Scot, Labour chancellor Alistair Darling, was in charge of the Treasury in 2008 when the banking crisis crunched and central banks started printing money for all they were worth – well what else could they have done? So in a sense Liam was probably right.
Then the Tory George Osborne became chancellor. One of his first moves was to create the Office for Budget Responsibility (OBR). The idea of this Treasuryfunded organisation was to offer independent analysis of the UK’s public finances. Now any government could point at an “external” organisation and say “the OBR said it would be OK”.
Maybe you remember news broadcasts of baths full of water which represented the UK debt, and there was trusty George, the plumber, trying to turn off the tap of borrowing which kept that bath overflowing. It was all about austerity and paying down the debt. Three years later, Standard and Poor, Fitch and Moody’s decided that the UK finances were no longer “triple A”, diminishing the creditworthiness Bank of England bonds.
Two years on and George decided to pay off debt from the First World War. He said “it was a moment for Britain to be proud of”. All he had done was to put the debt on another shelf in the same cupboard.
Mrs May was so proper in her assertion that there is no “magic money tree” – another fib. Alistair Darling had shown that there is always more money, you just have to print it, or at least tap some keys on a computer. So long as the balance sheet balances debt in one column and bonds in the other, the DUP could have £1 billion for supporting the May government.
Johnson really understood how money does grow on trees – provided you can pulp enough, you can never run out. Sunak with his moral compass tried to keep a lid on it, but circumstance left him with little choice but to make more. A lot of people got furlough money and diligently passed it on to the captains of industry by buying stuff and paying the rent.
Kwasi Kwarteng, pushed on by Prime Minister Truss, used his first Budget to stuck a middle finger up to Osborne and austerity and to cautious Sunak. Kwartang and Truss THINK (really!) that the best thing is to give the rich a whole heap more money and make sure energy companies get a good whack.
The rest of the world looks on and cannot believe what is happening – they cannot get rid of their pound-sterling holdings quick enough. The Bank of England cannot believe it either so they raise interest, and as the pound drops and imports become more expensive, oil prices rise even more, fuelling inflation in every direction.
Everybody but the members of His Majesty’s Government knows that never in a month of Sundays will any money trickle down to the less well-off from growth which is very unlikely to occur. Imports being more expensive, their supply will slacken, and that will add to more price rises.
How is it not obvious to the most ardent Unionist that there is no-one in the UK Government who has the slightest clue of what they are doing?
The Union of the Crowns came in 1604. The Bank of England was established 1694. The Darien scheme first expedition happened in 1698 and it is argued that the failure of the scheme was a factor which bought Scotland into the disaster of 1707 and the Act of Union. If only William Patterson had in 1691 decided that it was Scotland that required a central bank rather than England, would we be in the situation we are now in?
Cher Bonfis via email