DERRY JOURNAL Editorial: Tory budget sparks IMF predictions as Kwarteng cries 'socialism'
Is there something on Kwasi Kwarteng’s mind?
‘Scotland does not need the reheated socialism of the SNP; there is plenty of evidence high-tax, high-regulation socialism leads to a complete disaster; Labour stood on a platform of pure unadulterated socialism; we openly repudiate a socialist vision; the socialism of the Opposition is not going to work; socialists have never understood, we cannot tax our way to prosperity; we cannot just tax our way to prosperity in the way that the socialists claim; socialism and high tax do not work; Labour and others have stood four times on a socialist platform and the British people have rejected them, and if they go back to their socialism, they will be rejected once again; tired old socialist rhetoric’.
The British Chancellor threw the ‘s’ word in the face of his opponents no less than 11 times, with a ‘Soviet’ thrown in for good measure as he announced his budget for ‘millionaires, by millionaires’ as Colum Eastwood described it. It is doubtful the slur is landing how Mr. Kwarteng intends.
In 2016 a YouGov poll found 36% of British people viewed socialism favourably as compared with 33% who had a positive view of capitalism. Last year a survey of young people aged 16 to 34 by the Institute of Economic Affairs found 67% would like to live in a socialist economic system. Mr. Kwarteng sounded like a man from a different epoch. He raised the spectral straw man of socialism as a sure path to ‘complete disaster’.
Mr. Kwarteng’s growth plan is the biggest tax-cutting budget in half a century. Anthony Barber, Chancellor during the Heath administration tried something similar in 1972. It exacerbated a Sterling crisis, run-away inflation and a balance of payments crisis, the end result of which was Britain going cap in hand to the IMF in 1976.
Analysts at Deutsche Bank have suggested post-Brexit Britain is exhibiting all the signs of an ‘emerging market’. DB’s Shreyas Gopal, in a note published as the British Prime Minister Liz Truss assumed office, wrote: “If large and untargeted fiscal stimulus pushed the current account deficit toward 10% of GDP, risks of a sudden stop would rise materially, in our view.” It is now at 8.3%.
On Friday Nouriel Roubini, the US economist who predicted the 2008 crash, tweeted: “UK is starting to be priced like an EM. Back to the 1970s. Stagflation and eventually the need to go and beg for an IMF bailout ….”
Let’s hope it doesn’t come to that but IMF boss Kristalina Georgieva should keep her phone on. If this were to happen as a consequence of a tax giveaway to the rich, it really would be a complete disaster.