Sterling takes a pounding as the world thinks the UK’s budget is Kwesi-ness-September 26, 2022

It doesn’t take much to cock up economic policies. However, most countries have a solid cadre of economic and financial technocrats to stop ministers or other policy decision makers from getting it really wrong. Sadly, the UK, which would normally be a good example of this, has put itself on a bad path.

First, the new government headed by Liz Truss, sacked the aptly-named, Tom Scholar, as permanent secretary at The Treasury, on the first day in office:

Scholar had more going for him, you’d think, having seen the government’s economic policies through financial crises over three decades. Well, so long, farewell, Tom!

Fast forward. The new chancellor of the exchequer (finance minister), Kwasi Kwarteng, announced a so-called mini-budget, last Friday, which seems destined to do maximum damage in a short time. It’s main pillar was a massive tax reduction favouring the richest, with the kicker that more tax comes will come in a full budget. Markets haven’t taken to it well:

It’s a bit like telling the world that the barn has been set alight, and more fuel will be added to the blaze soon. The pound sterling got dumped across markets, over the weekend into the new week, hitting an all-time low against the US dollar, of $1.03, in Asian trading:

The main opposition Labour Party have jumped all over the budget, and it’s clear snub to the majority of Britons, languishing under rising inflation and energy costs spiralling. Those woes wont get better soon.

It’s said a day is a long time in politics. Well, the weekend may seem like an eternity, and the new week may soon seem like a year. Good luck!

Before you shed too many tears, though, remember the defeated ledership candidate, former chancellor of the exchequer (finance minister), Rishi Sunak, warned about “fairy tale” economics:


Author: Dennis G Jones (aka 'The Grasshopper')

Retired International Monetary Fund economist. My blog is for organizing my ideas and thoughts about a range of topics. I was born in Jamaica, but spent 30 years being educated, living, and working in the UK. I lived in the USA for two decades, and worked and travelled abroad, extensively, throughout my careers and for pleasure. My views have a wide international perspective. Father of 3 girls. Also, married to an economist. :)

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