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| Budget |
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| Disastrous mini-budget raises spectre of swingeing cuts |
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The week has been dominated by economic news, with the pound plunging and the Bank of England being forced to intervene in the bond market, following chancellor Kwasi Kwateng’s mini-budget last week (The Guardian). Markets have been spooked by Kwateng’s decision to borrow heavily to fund an energy price cap and tax breaks for the wealthy. Kwateng and prime minister Liz Truss have argued that the fiscal event will boost growth. But most economists think this is unlikely, so one or more of revised plans, interest rate hikes and spending cuts will be needed to restore stability.
Sir Charlie Bean, a former deputy governor of the Bank of England and member of the Office for Budget Responsibility, told SkyNews that cuts of as much as £50 billion a year could be required, which would mean “rethinking the boundaries of the state” and “moving away from our health service.” Some critics of the government think this is exactly what it wants to do. But in a string of tweets, Nigel Edwards from the Nuffield Trust warned an insurance model won’t necessarily improve quality or choice and could, in the absence of a commitment to social solidarity, lead to “a poor service for poor people.” |
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