It seems inevitable that the government will have to do a U-turn on their unpopular and politically risky mini-budget. This morning it was announced that the Chancellor, Kwasi Kwarteng, will return to the UK a day early to deal with the mini-budget’s major fiasco.
HM Treasury stated this morning:
“After completing a successful series of meetings at the IMF, the Chancellor is returning to London today to continue work at pace on the Medium Term Fiscal Plan.”
Lord Vaizey, Conservative peer, when asked about a U-turn, said:
“I think it looks inevitable. I mean, the government has absolutely no easy choices after the mini-budget caused such a catastrophic economic crisis. I think it’s inevitable there will be changes to the mini-budget. What is now being kind of muted is that there will be some sort of compromise that can still be presented as radical economics.”
The BBC reported this morning that Financial Markets are already “pricing in a U-turn”. Russ Mould, an investment director at AJ Bell commented:
“But we’ll have to see what the chancellor says, given that his official position at the moment is that he – and the prime minister – are not for turning.”
He added that without a U-turn, any gains may well “unwind”.
A government in meltdown
Ed Miliband, shadow climate change secretary told Sky News:
“This is a government in meltdown and an economic policy in tatters. And frankly, I think the Conservative Party should be hanging its head in shame. What they are putting the country through. This is about people’s livelihoods, people’s homes, and people’s mortgages. And let’s be clear about why this has happened.
“You have a government that embarked on a strategy of saying, let’s have massive tax cuts for the richest in society. For big corporations, so-called trickle-down economics, which isn’t going to work.”