Rarely in British political history has a budget been so disastrous.
How to lose a PM in 45 days
Spooked by large and unfunded tax cuts, the markets reacted with a vengeance. Sterling plummeted to a historic low against the dollar, share prices fell and bond yields rose.
The unfunded tax cuts came precisely at a time when the markets were becoming increasingly nervous. Some of the concern is global (War in Ukraine, supply chain issues, the changing macroeconomic cycle) and some is unique to the UK (slow growth, Brexit starting to reveal its contradictions).
With its policies – unfunded, without independent number crunching and generally devoid of seriousness and rigor – the Truss government put itself in the crosshairs of the market at exactly the wrong time.
Truss tried everything – from throwing her chancellor and friend under the bus to canceling her policies – but it didn’t help. Unable to meet his goals and disrespected by the markets, Truss was a leader without a purpose.
This could mean that the upcoming rate hikes are less sensational than they might have been, although they could still mean average homeowners paying hundreds of pounds more every month.
But with fiscal discipline required and a cost-of-living crisis in full swing, Sunak will certainly have his hands full.
Labour’s chances were boosted
It has long been assumed that Labor would struggle to win a majority. The typical evidence is the Conservatives’ current large majority (80 seats) and Labour’s continued work in Scotland – one of its traditional heartlands.
This reasoning is wrong. First, the majority in 2019 was inflated by Labour, led by Jeremy Corbyn – the most left-wing leader in modern British history. The current incumbent, Keir Starmer, may be boring, but few will actively vote against him.
Second, Britain’s ‘first past the post’ system works to accentuate moderate vote swings.
Third, the Conservatives’ 2019 slogan “Get Brexit Done” has not been delivered and cannot be reused.
Finally, after changing their leader four times in six years, the Conservatives are increasingly dysfunctional and factional.
Gary knows the score!
Football commentator Gary Neville told the recent Labor conference: “The cross is in the box – it just needs to be nodded into the net.”
He was talking about Premier League regulation, but he might as well have been discussing Labour’s chances at the next election.
Source: The Nordic Page