Colleagues ask if the new PM and chancellor Kwasi Kwarteng’s experiment is ‘a stroke of genius – or will blow up the economy’
n the hyperbole-fuelled theatre of Westminster, where breathless rhetoric and implausible spin are so often the defining qualities, few events can truly be said to live up to a big billing. Yet when allies of the chancellor, Kwasi Kwarteng, promised a “game-changing” address in the run-up to Friday’s economic announcement, for onceIn fact, officials who had been billing the announcement as a mere “fiscal event” or “mini-budget” had been engaging in a rare piece of political understatement.
“I sat and watched in amazement,” said Charles Walker, a senior Tory backbencher who represents Broxbourne. “Three words. It is extraordinary. We’ve tried to grow the economy in a number of ways to get a trend rate of about 2.5%. It is legitimate to try and find the secret sauce to get it back again. Whether it works well, remains to be seen. I certainly hope it does for the sake of my constituents and the general welfare of the country.
The seismic shift away from the David Cameron and George Osborne rhetoric of fiscal responsibility – an approach even Boris Johnson’s chancellor Rishi Sunak espoused – has astounded those from earlier political generations. “Not a single revenue-raising measure in that budget statement, not one,” said the former shadow chancellor Ed Balls.
“It’s an extraordinary gamble, the likes of which we haven’t seen since the glory days of Edward Heath and Anthony Barber,” said the former Treasury permanent secretary Nick Macpherson, referring to Barber’s 1972 budget that slashed taxes and created a short-term boom – before sparking an inflation and currency crisis. “What the budget does reveal is that we are on a totally different course, in macroeconomic terms, than any other government.
Some in the Tory party fear the Bank of England will order an emergency increase in interest rates in response. Many in Whitehall and the Commons also believe big spending cuts will have to be announced soon – but with hospitals and schools already under pressure, there are few easy cuts. Welfare could be targeted, but the bulk of that cash goes towards pensioners, many of whom backed the Tories in the past.
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