U turn if you want to…

to improve is to change, so to be perfect is to have changed often

One of the first things you learn in a UK Politics 101 course is about the Post-war Consensus, the economic order and social model which the major political parties in post-war Britain shared a consensus supporting view about the right things to do to run the country and rebuild it after the Second World War.

The consensus lasted until the late 1970s when Thatcherism put market forces at the heart of, well, everything really. Yet post-Thatcher, post-Major, post-Blair, there has still been a general agreement on the need for a proper fiscal framework, and that that framework is essential for market stability. Hence why you had former Chancellor of the Exchequer George Osborne and former Labour Shadow Chancellor Ed Balls, rekindling their economic bromance on the Andrew Neil show the other day.

Alas, in a little under an hour, the newly minted Chancellor Kwasi Kwarteng and PM Liz Truss managed to sweep away all that consensus and stability when the markets took agin, not just the abolishment of the 45% tax rate, but also the uncapping of the bankers’ bonus payments, the NI rise rejig and the huge increase in government borrowing to fund it all. Boom: it was quake in your boots time for any company that has to forward buy in dollars or even Euros as the value of sterling hit the floor then rose as slowly and carefully as a marathon runner testing their legs on the stairs the day after.

There are economic arguments in favour of all those elements of course, and maybe the Chancellor would have got away with all of them had he taken his time and announced them over a period of time – weeks, if not months. Instead, he pushed all the chips onto red and spun the wheel.

As of yesterday, of course, the U-turn has been made on that 45% rate cut, the market took notice and sterling is now a whole 10% above where it fell to last week. Great news for those financial investors who shorted the pound after a cocktail party that Kwarteng attended.

Have these people learned nothing from the past two years? Have they not realised that some stuff, however innocent, just looks bad to those outside the Westminster bubble. The only reason that Truss and Kwarteng even got a sniff of their current roles is because Johnson played fast and loose with public trust, failing to understand that ‘because I want to’ is not an excuse that will wash with people who deserve their leaders to at least show a semblance of empathy. Johnson believed his own PR for too long and is headed back to the back-benches and the after-dinner circuit. For now.

In the meantime, the other political parties are making the most of Tory turmoil and the rest of us can just sit back and let them get on with it while we have a nice cup of tea while we can still afford the electricity.

 

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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