The UK had on Wednesday Mario Draghi moment. The famous “whatever it takes” of the then ECB governor succeeded in containing the euro crisis. The Bank of England announced that it will buy long-term government bonds “in whatever range is necessary” to stabilize markets and stem the slide in sterling. Which is that the markets and their investors have turned their backs on the newly enacted Conservative government headed by Liz Truss. They do not trust their economic plans, which threaten to raise the country’s debt by about 200 thousand million euros, and make it unsustainable. The last legacy of prestige I kept conservatives This was because of his strictness in the balance of public accounts. With a stroke of a pen, and with a plan filled with neoliberal ideology, Truss and his minister, Kwasi Quarting, destroyed this idea.
In the worst moments, with inflation soaring to 9.9% and an energy crisis already forcing many citizens to choose between putting food on the table or keeping the house warm, the new government has sent the markets an irresponsible economic message and to the citizens. Unbearable political message. He told the first that all the announced joys, in the form of aid to pay the gas and electricity bill, or the massive reduction in taxes, would be charged directly to the public debt. For citizens, the urgent matter is to end the 45% cap on personal income tax for high earners, reduce the corporate tax burden, and reject any additional tax on extraordinary profits for energy companies. Even the International Monetary Fund has called on Truss to rethink some of the measures that will only lead to more inequality and greater inflationary pressures.
The British once again turned their attention to the main opposition party. Its leader, Keir Starmer, whose moderate strategy initially raised concerns among the most extreme on his part, promises tough and responsible policy, accusing the government of “losing control of the UK economy” and cutting taxes on the rich.
Everything suggests that the Conservative Party aspires only to survival on the basis of social experiences, not counting the suffering of citizens or businesses. First was Brexit, which divided and weakened the country. It pursued a restrictive immigration policy, leaving the UK without a workforce when it needed it most. Finally, the new government rescued the old theory of indirect effect, according to which lowering taxes on those at the top leads to more wealth going down. The markets response has been twofold: forcing the Bank of England to regulate this nonsense, with a massive increase in interest rates, and forcing Liz Truss to adjust some clearly wrong actions.