Britain’s new Chancellor Kwasi Kwarteng delivered a blistering mini-Budget this week that was anything that small.
A wave of tax cuts were unleashed. Some had been heavily trailed, such as spiking the National Insurance hike and a stamp duty reduction, but there were also two rabbits out of the hat: a cut in basic rate income tax to 19p from April and abolishing the 45p income tax rate too.
Those tax cuts joined a wave of spending commitments, most notably the huge energy price guarantee bailout for Britain’s households and businesses.
Paul Johnson, of the IFS, said: ‘Mr Kwarteng is not just gambling on a new strategy, he is betting the house.’
On this week’s podcast, Georgie Frost, Lee Boyce and Simon Lambert discuss what the going for growth mini-Budget means for people, how much they may save in tax, and whether it will work or cause the UK economy even more problems down the line.
One thing was clear in the aftermath, markets didn’t like the break from the orthodoxy that they saw: the pound tumbled below $1.10 and UK gilt yields jumped.
But how much does that have to do with the mini-Budget and how much does it have to do with the Bank of England’s rate decision that delivered a bumper rise of 0.5 percentage points, which was still considered small next to the US Federal Reserve’s 0.75 percentage point bazooka?
And finally, we’ve heard lots of the glass half full verdicts on our current economic situation but what is the glass half full one? Simon has a crack.
