Rumors were rife, Thursday, October 13, on the imminence of a first renunciation of Liz Truss concerning her “minibudget”. The project, almost unanimously considered catastrophic, provides for more than 40 billion pounds sterling (46 billion euros) in unfunded tax cuts – if not by public debt. Three weeks after the British Prime Minister and her Chancellor of the Exchequer, Kwasi Kwarteng, presented it on September 23, financial markets are feverish and Conservative MPs panicked.
According to anonymous sources cited by the Sky News channel, the Guardian where the FinancialTimes, discussions are taking place between Downing Street and the British Treasury to return to the increase planned by Boris Johnson in the tax on company profits (Liz Truss had promised to remove it). The Bloomberg agency specifies that a firm decision will probably not be taken before this weekend and the return of Mr. Kwarteng from Washington, where he is attending the annual summit of the International Monetary Fund.
Financial operators already seemed to have integrated the ” good news ” of the government’s about-face on Thursday. The pound rose significantly against the dollar and yields on British government bonds fell slightly, a sign of a slight upturn in confidence in the British economy. Kwasi Kwarteng, however, continued to assert from Washington that he was ” concentrate “ on the execution of “plan for growth” by Mme Truss and he would go ” nowhere “ while in Westminster the media speculated intensely about his resignation. At the end of the day, however, he conceded a ” we’ll see ” to the question of whether his minibudget was on borrowed time. And on the night of Thursday to Friday, we learned that he was cutting short his stay in Washington and was on a plane, back to London.
Liz Truss kept a low profile on Thursday – just making it known that she was having tea with MPs from her Conservative camp in the hope, presumably, of coaxing them. But these gestures of appeasement seemed ridiculous in the face of the deep discredit from which the leader now suffers. Because even if this ultraliberal, self-proclaimed admirer of Margaret Thatcher, still refuses to recognize the failure of her “plan for growth”she is at an impasse and in recent days, her retirement has seemed inevitable.
More and more pundits and politicians – including the Tories – believe that his enormous fiscal stimulus was simply not credible, from an economic or political point of view, and that it should be abandoned as soon as possible. quickly, in order to limit the damage already inflicted on the reputation of the UK’s fiscal seriousness and on the savings of the British. Following the presentation of the mini-budget, mortgage rates rose sharply. On Tuesday, the Institute for Fiscal Studies (IFS), a highly respected research institute specializing in the evaluation of public policies in London, published an edifying study, estimating the annual cuts in public spending that the Truss government should tax to finance its tax cuts by keeping the public debt under control.
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