As I am writing this the government has just announced that they will help businesses, charities and other public sector organisations by capping energy prices for six months, reimbursing the difference to energy providers. This comes just after an announced plan to help households in a similar fashion.
With these developments fresh in our minds, let’s take a look at the political history of the Chancellor Kwasi Kwarteng and what this will mean for the economy.
Between 2005-6 he was the chairman of the Bow Group; the Bow Group founded in 1951, is the oldest conservative think tank in the UK. In the 70s the group was closely associated with the development of post-Keynesian economics, which led to the development of Neo-liberal, Thatcherite economics. In recent years the Bow Group has been strongly supportive of Donald Trump, likening him to Ronald Regan, and in 2018 hailed Nigel Farage as someone who has made great contributions to the conservative cause.
Following on from the Bow Group, after Kwasi became an MP in 2010, he along with other conservative MPs that include our current PM Liz Truss, co-authored ‘Britannia Unchained’. Published in 2012, it was instantly met with controversy, describing
British people as among the ‘worst idlers in the world’. The book has also been seen as providing an optimistic, albeit a highly conservative view on the future of the UK.
I was going to continue this article with a further delve into Kwasi’s biography, but the writing of this article has been in the backdrop of a litany of government announcements, so I have decided to change direction somewhat.
As I type these words, my phone flashed with the news that the Chancellor will announce that 250,000 people will be told to take active steps to find work or see their benefits reduced. This announcement is being framed as a pro growth move by the government to get people into work.
The Chancellor’s mini budget is looming and the full budget is just on the horizon come November. What will be announced? By the time you’re reading this, you’ll probably know and be judging my accuracy. Kwasi is expected to cut corporation tax, extra borrowing to fuel economic growth, cutting stamp duty and vastly increasing the defence budget to help Ukraine and encourage growth.
Borrowing aside all these policies follows a Thatcherite trend of small government and low taxation. It has reached levels of parody now, but the efforts of Liz Truss to mirror Thatcher not just in policy but also presentation are well known. This is something, looking at Kwasi’s past in the Bow Group he will push forward with as well.
I expect the Chancellor and the government to reaffirm a commitment on privatisation and possibly baby steps towards privatising small parts of the NHS in the guise of reducing government spending and to boost growth. Thatcher famously crushed the Unions as she suggested they were a large part of the country’s economic mess at the time; this example is likely to be followed in the wake of mass strikes going on up and down the country, to again aid economic development.
Furthermore, following the announced removal of the bankers bonus cap I expect further removal of restrictions on the banking and services industry, a policy unsurprisingly introduced by Thatcher when she was elected.
Am I right? Only time will tell, but me being right is not important. The important thing is that whatever the Chancellor proposes is actually able to pull this country out of the cost of living crisis deep economic hole we find ourselves in. I have my opinions on whether this will work and I’m sure you do too, but in the end, time is the only thing that can reveal that answer.