The British government canceled the tax sale of the rich in the face of political necessity. In the Finance Minister’s speech on Monday, no new severances were heard, but a return to safe themes, i.e. robbing the EU and the opposition, writes HS correspondent Annamari Sipilä.
London
When British Chancellor of the Exchequer Kwasi Kwarteng appeared in front of the party congress people in Birmingham on Monday, he was perhaps aiming for a light and self-deprecating start:
“It’s been a day.”
How else could a politician, who has just made the biggest U-turn of all time, start his speech.
Kwarteng had surprised everyone early Monday morning by confirming that the government is canceling the tax cut for high earners. The removal of the highest tax rate, i.e. 45 percent, had been announced just over a week earlier.
The reform, which attracted criticism and enthusiasm, quickly ended up in the scrap heap, because Kwarteng and the Prime Minister Liz Truss noticed the conservative government’s popularity melting even faster.
The government had to be saved. The rich were thrown – for once – overboard.
Now the British government got at least a moment’s respite.
announced by the Yougov company on Monday a quick survey according to the majority of Britons – as well as Conservative voters – believe that the government did the right thing in canceling the tax cuts for high earners.
Thence it’s only been about a month since Truss’s new government started. In a short time, the conservative government has already managed to score several of its own goals.
Promising tax cuts for high earners was a miscalculation at a time when more and more people don’t have enough money even for normal everyday life. Even among many conservatives, a tax deal for the wealthy has not been considered a good idea.
The misjudgment was also how the tax reduction news was allowed to cover up a much more relevant and wide-ranging economic program: the government subsidizes the energy bills of British residents and businesses with tens of billions of pounds. On Monday, Kwarteng tried to remind the audience of the party conference also about these so-called good deeds of the government.
Third my goal has been how Kwarteng’s “mini-budget” was originally built with little preparation, discussions and consultations from different parties. The market was shocked by both the content of the mini-budget and the way it was announced the other Friday.
As Kwarteng himself said on Monday, there has been “a little turbulence”.
In his speech, Kwarteng tried to restore the confidence of the government. He referred to the Bank of England as well as the independent body that supervises the government finances (Office for Budget Responsibility or OBR) and also said that there is no way to sustainable growth without a responsible fiscal policy.
So no more surprises, came the sweet message.
Basic message At Kwarteng, however, it was the same as before: growth is the number one goal, and growth is sought through, among other things, tax reductions.
He did not make any new political openings on Monday. In terms of calming the market, it was probably the right solution.
Instead, Kwarteng returned to familiar and safe themes, such as robbing the EU legislation and the Labor Party.
Few Brexiteers hardly seriously believe anymore that EU legislation still “brakes” Britain’s development. As a rhetorical device, however, it still seemed to work among conservatives. Even the markets don’t shy away from political filler speech.
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