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During the pandemic, which caused chaos across the globe, we longed for recovery and stability. At the beginning of this year, when Covid-19 measures were being eased in the UK and we were returning to something resembling normality, the country breathed a collective sigh of relief. But a year that was supposed to symbolize economic recovery has descended into financial calamity.
Since Liz Truss was installed as Prime Minister chaos has ruled. A package of unfunded tax cuts was announced, which resulted in market crisis and the value of the pound plummeting. The chancellor has now been replaced, who speedily reversed most of the policies the government initially championed. This is not the financial stability that the UK so desperately needs.
The package of unfunded tax cuts initially introduced by former Chancellor Kwasi Kwarteng amounted to around £45bn. Not only were they were unfunded, but they were also without any independent assurance. The UK is a nation of institutions, the Office for Budget Responsibility (OBR) being one of them. They are usually invited to scrutinize the government’s financial plans and provide assurance that the sums add up.
When the prime minister and chancellor revealed their raft of cuts, they did not use the OBR or provide any independent evaluation of their plan. This is unprecedented. It demonstrates fiscal irresponsibility and blatant disregard for the institutions of the UK. It is likely that the market lost confidence in the government not because of any one policy, but because they did not act in a right and proper way.
The government’s actions have also done little to reassure the public. Up and down the UK, families are fearful of what this winter will bring. Tough decisions are expected, and many are wondering how they will make it through. The best politicians are those who make difficult decisions, but they do it for the good of the people and the country, but it was clear from the mini-budget that the government’s policies would benefit higher earners the most.
There has been no reassurance about the UK’s public services, and I fear that further cuts are to come in order to make the savings the government still needs to find. But this would be disastrous for UK public services, which are already stretched extremely thin. In our recent Performance Tracker report, we find that our public services are in crisis and performance has still not returned to pre-pandemic levels. There is simply no fat left to trim.
We have never needed a solid economic plan more, and I encourage the government to make good public financial management the center of their strategy. One thing is for certain, the catastrophic actions of the last few weeks will not be forgotten.
