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The Premiership of Mary Elizabeth Truss.Sept 2022 - Oct 2022

mandryka said:
Can someone please explain to me why Kwartang doesn’t explain now, or indeed last week, how he intends to reduce Debt:GDP? I mean, he must have the plan!

There seems to be a game of brinkmanship going on, and I can’t understand why.
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Isn't growth the whole idea? Not time to say the other bit yet: more cuts to public services.
 
paulfromcamden said:
But am I right in thinking the higher cost of borrowing is here to stay in the short to medium term?
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The entire yield curve on the short term interest rate future just lifted however many basis points without changing shape which implies the market expects borrowing to be that amount more expensive for the next 5 years.

With the caveats that a) of course policy or other factors might change at which point the interest rate curve will change and b) I no longer work in rates and bonds so don't actually have access to market data only the same financial press reports and twitter shitposts as everyone else. And of course your confidence in the predictive powers of the interest rate future may vary.
 
Seanm said:
Isn't growth the whole idea?
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Yes. They are betting that borrowing a lot more to cut taxes for a small percentage of rich people will cause the economy to grow significantly more than it would otherwise.
 
Seanm said:
Isn't growth the whole idea? Not time to say the other bit yet: more cuts to public services.
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At the moment he’s saying « Trust me, we’ll grow big time, now lend us lots of money to make it happen. » But no one’s going to trust that! He’s got to say how he expects the growth to happen and when and how and why, and with a bit of detail, not just saying « we’ll cut taxes » and waving his arms. People need numbers and a plausible story backing up the numbers, a spreadsheet and notes, or it all looks half baked and very risky.

He’s saying that he’ll publish his plan Nov 23 - but my question is, why? Why not put an end to this kerfuffle and publish the plan now, so everyone can say « jolly good, we see you know what you’re doing, we’re on side. »

Imagine going to the bank and saying « lend me £10M so we can grow »and the bank say « excellent, how are you going to spend it and when can I expect to get it back? » and you say « well we’ll make lots of sales! And you can have it back soon. That’s the plan, to make lots of sales by hiring salesmen and an ad agency and selling.»

You’d be given the bums rush!
 
matthewr said:
Yes. They are betting that borrowing a lot more to cut taxes for a small percentage of rich people will cause the economy to grow significantly more than it would otherwise.
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The only upside I see to this situation not coming to pass is that events over the next few weeks and months would put paid to the idea that the wealthy are the engine of the economy.
 
mandryka said:
People need numbers and a plausible story backing up the numbers, a spreadsheet and notes, or it all looks half baked and very risky.
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There is no plan! For these people it's simply an article of faith that cutting taxes will stimulate the economy and cause growth. Coming on Nov 23 is not details of the non-existent plan but details of fiscal policy (i.e. spending budgets) and the OBR forecasts that should have come now. Basically he is hoping that stuff will have improved enough by then that he can make it look like a good idea.
 
I can just hear her Dad saying - "you've really gone and loused up now, Liz. What do you propose to do about it?"
 
matthewr said:
Yes. They are betting that borrowing a lot more to cut taxes for a small percentage of rich people will cause the economy to grow significantly more than it would otherwise.
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I think you’re not being fair there, because I bet the main engine for growth is not individual spending but business investment - in the charter cities. In that thing I posted earlier, the interview with Truss, she talks about moving money in The City to the regions, into manufacturing. But as we all know, I haven’t seen the plan.

(I was quite surprised that her vision should make such a big thing out of manufacturing.)

Cutting the top rate of tax sends out a message, that Truss’s Britain is a comfortable place for wealthy people, that’s all.
 
Well, this has turned sour quicker than even biggest pessimist would have predicted. I can’t work it out, the PM & Chancellor are not stupid yet they behave like they are.

This is peoples lives, I take no pleasure in this & it is practically impossible to get rid of them before 2024.
 
Woodface said:
I can’t work it out, the PM & Chancellor are not stupid yet they behave like they are.
.
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yes well this is why being a pundit is interesting - making sense of things like this from the outside. I can’t do it in this case though . . . not yet.
 
All of a sudden everyone is a currency trader. We've been watching the dollar moon against everything else for the best part of the last year and nobody gave a shit then.

Visualised well here

I see several mortgage lenders have removed all new mortgage products off the market, presumably they're expecting a big rate rise or something.
 
mandryka said:
I think you’re not being fair there, because I bet the main engine for growth is not individual spending but business investment - in the charter cities.
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So why one earth would one *borrow money at increasingly costly rates* in order to cut individual taxes?

mandryka said:
Cutting the top rate of tax sends out a message, that Truss’s Britain is a comfortable place for wealthy people, that’s all.
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<insert Picard facepalm ASCII art here>
 
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