As Liz Truss is vying to be our next Conservative leader and prime minister, some of her colleagues worry that, with Prime Minister Johnson’s instigated pick, she will become became Boris Johnson’s constant candidate.
Economically, they couldn’t be more wrong.
Are from became prime minister two weeks agoMs Truss has drawn a clearer line of ideological division between her Conservative Party and Labor Party than we have seen since under three previous Conservative prime ministers.
The promises to cut taxes and protect big business she made in the Conservative Party leadership race were not, after all, politically favorable policies to win hearts and minds. public mind.
These are the policies she intends to follow as prime minister. She said in the leadership race she wants to be the change candidate and she is shifting taxes and spending the consensus we live in, to a greater or lesser extent, since the time. New Labor.
There is no income tax on profits in excess of £170 billion by energy companies, she energy price guarantee would instead be paid through a government loan, which taxpayers would ultimately have to pay back: reversing the corporate tax increase planned for large businesses and eliminating the increase in national insurance benefits for the highest earners as well as the lower: removing the cap for bankers’ bonuses and an energy pack that benefits the very rich as well as those who really need it.
It is a paradigm shift in the government’s approach, from economic policy towards redistributing wealth through the tax system from those with the deepest pockets to those most in need. to a new approach where driving growth is the key to fixing public services and helping people.
In our first interview with the new prime minister on the 102nd floor of the Empire State Building, she made it very clear that she was comfortable with pro-growth policies being put first.
When I asked the prime minister if her plan to cut taxes – a big boost for big businesses as well as wealthier workers – was fair, she told me this: I do not accept this argument that the tax cuts are somehow unfair.
“I mean, what we do know is that people with higher incomes generally pay more in taxes. So when you reduce taxes, there’s often a disproportionate benefit because those people are paying more in taxes. right from the start.
“We should be setting our tax policy on the basis of what will make our country most successful, what will benefit that economy for everyone in this country.
“And what I don’t accept is the idea that cutting taxes on business doesn’t help people in general.”
And when I told Ms. Truss that she was preparing to be an unpopular prime minister to accomplish this goal, she said this: “Yes, that’s right. What matters to me is that we are. develop the UK economy, because that’s what will ultimately bring in higher wages, more investment in towns and cities around the country, that’s what will ultimately provide more money into people’s pockets and it will also allow us to fund services like the National Health Service. And to have that economic growth, the UK has to compete.”
The tax cut plan is very risky
Her plan carries huge economic and political risks. Politically, Ms. Truss is poised to cut taxes for those who need it least and pay for it through government borrowing to pursue growth.
Her argument is that the public is more interested in better services, better jobs, and better infrastructure than they are about fairness in how the state taxes its citizens and businesses.
She adheres to the principle that the rising tide will lift us all – but what if that development fails? And what if British workers don’t like the tax cuts they consider unfair when they’re already sensitive to feeling the squeeze?
When I told the prime minister that voters might not think it’s fair that their children end up getting a bill that funds government-supported tax cuts for big businesses or plans. plan to secure energy prices, she told me: “That’s a particular position you’re expressing, that’s what people on the left of politics often say.
“What I’m saying is that by keeping taxes low and growing the economy, we’re going to get more tax dollars, and really, that’s going to be successful in the long run, in providing opportunities that people can’t afford. who wants to see.”
The ideological lines between red and blue are clearly stated by the prime minister, but in practice this view is not necessarily partisan.
More than two-thirds of Britons believe there should be a low income tax on energy companies. Then these are not so divisive according to the political divide between left and right, it’s more about public sentiment and voters’ approach to taxes and on this Ms Truss clearly was that she was prepared to go the wrong way of that pervasive division.
Ultimately, she believes voters will support her in the next general election if they can get a GP appointment, a good job, and a high salary.
It is an approach that pits the Prime Minister of the United Kingdom against economic boundaries with his US counterpart, President Biden, who unleashed a “drip economy” trick via Twitter just as the Prime Minister was celebrating. advantages of tax cuts for you. in our interview.
“I’m sick and tired of the drip economy. It never worked,” he tweeted. “We’re building the economy from the bottom and the middle.”
It was a coincidence, I suppose, that the president’s comment was more intended for his domestic audience than a criticism of the new incumbent for Number 10’s attitude to the economy.
But it is clear that the President of the United States does not agree one bit with Ms. Truss’s view that cutting taxes on businesses and the wealthy will give the rest of society a “tax cut”.
‘More than politics’
And back home, you have to wonder how the red wall coalition and Tory MPs will make this happen too.
Ms Truss won only public support of 142 of 353 MPs in the race for the leadership, despite trying to win for weeks.
Her support within the party has dried up, and these policies are sure to split the divergent coalition between constituencies and constituencies, Mr Johnson pulled together in 2019.
But this is not just politics. It also concerns the economic governance of the country and investors’ confidence in the Truss government. And that confidence seems shaky.
Confidence in British assets is waning, with bonds, stocks and the pound – simultaneously falling to 35-year lows – and the Bank of England now weighing its biggest rate hike in years. three decades in response to that and rising inflation.
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On Friday, markets will be able to better understand – and be able to rule on – Ms Truss’ economic plans, as her chancellor sets out the cost of securing her energy prices and proposes Producing tax cuts in a Small Budget could prove to be a pivotal moment for her new government.
And as for the Prime Minister herself, she firmly believes in her economic plan, telling me that while the country faces “very difficult times” this winter, she is adamant. “we’ll get through it”.
However, be it from energy allocation this winter, to rising interest rates and inflation, a lot is out of her control.
Ms. Truss can make policies, but ultimately it is the market and the voters who decide – and right now, there is a lot of skepticism surrounding the new Prime Minister and her policies.