Kwasi dashes for growth: The new Chancellor is determined to give the supply side of the economy a chance, says ALEX BRUMMER
A laser focus on growth by Kwasi Kwarteng echoes past attempts by government to escape from the perceived malign influence of Treasury orthodoxy.
Way back in 1964, Harold Wilson (by some accounts Queen Elizabeth II’s favourite prime minister) sought to unleash the white heat of technology and established the Department of Economic Affairs under George Brown.
It eventually folded and the Treasury triumphed in the face of pressure on sterling.
Target: The ambition of Chancellor Kwasi Kwarteng to return growth to an average of 2.5% a year – the long-term average before the financial crisis – is laudable
Gordon Brown, who arrived at the Treasury bursting with ideas which included an independent Bank of England, found himself in conflict with Terry Burns, who subsequently resigned.
Kwarteng chose to dispense with the services of top mandarin Tom Scholar before his foot was barely over the doorstep of Number 11.
In his second term as Permanent Secretary, Scholar possessed shiny spurs earned in the financial crisis of 2007-09 and during Covid-19. His Treasury orthodoxy of fiscal discipline was viewed as overriding all else and cost him his job.
In a vitriolic attack, former Treasury minister Lord Agnew – who resigned from Boris Johnson’s government over Whitehall waste in Covid – wrote in The Times that Scholar’s departure should be ‘a cause for celebration’.
The ambition of Kwarteng to return growth to an average of 2.5 per cent a year – the long-term average before the financial crisis – is laudable.
It certainly has not been helped by the way in which the Treasury went gung-ho for tax increases in the wake of the pandemic.
The March 2021 budget began the process of reclaiming cash for the Treasury with a freeze on personal allowances until 2025-26 raising £19.1billion and the proposed rise in corporation tax from 19 per cent to 25 per cent from 2023 yielding £47billion over the forecast period.
This was followed in September by the new health and social care levy seeking to generate £12billion a year.
It was partly rescinded for the less well-off in the spring of this year. The UK’s macho-fiscal policy has contrasted with much of the G7.
The constant refrain from the Treasury has been this was necessary because of the mounting interest rate bill on the national debt.
The UK was in a different position to its G7 compatriots because 25 per cent of its bond issue is inflation-linked.
That’s true. But in that the decision to fund using inflation-linked stock is made by the Chancellor – in concert with officials and the UK debt management office – it does not look brilliant.
In the terms of the normally polite ways of Whitehall, Kwarteng’s approach looks overly aggressive. But he is determined to give the supply side of the economy a chance.
City enforcer, the Financial Conduct Authority, is notorious for a spineless approach to alleged offenders, most recently bankers responsible for the collapse of HBOS.
It is encouraging that chief executive Nikhil Rathi, who has vowed to overhaul performance, is taking a tough line with Link Fund Solutions over its role in the implosion of the Woodford Equity Income Fund three years ago.
The FCA’s probe of Woodford is uncompleted but the decision to seek an indemnity of £306million from Link suggests it is alert to the losses suffered. Its decision will be fodder for City law firms which aim to tie disciplinary action up in legal knots.
Link Group, the Aussie parent, has issued a statement challenging the FCA’s decision claiming any liabilities are the responsibility of Link Fund Solutions, not the parent.
Good try. But that’s like saying because your teenager smashed up the family car it is their responsibility not yours or that of your insurance company.
The FCA’s tough stance will be watched closely by Neil Woodford, Hargreaves Lansdown, which exposed so many of its clients to Woodford, official depository Northern Trust and all involved in a £3.7billion debacle.
Food for thought
Private equity outfit Clayton, Dubilier & Rice must be regretting that it became involved in a bidding war Morrisons.
Instead of being able to use its strong balance sheet and smart management to take Morrisons to the next level, it finds that in an age when consumers are price driven, the Bradford firm’s market share has been overhauled by German discounter Aldi.
It is to be trusted CD&R won’t engage in reckless financial engineering, destroying Morrisons’ farm-to-supermarket model as it overcomes a whopping interest rate bill.
Share or comment on this article:
LIJ49 Coduri Paysafecard and Paysafecard Code
PSN Free Gift Cards Codes and $100 Free PSN Gift Cards
Free Tiktok Followers Generator and Who Has the Least Followers on Tiktok and W6hj0q
Free Fortnite V-bucks Generator and Fortnite Item Shop February 12 2022 and 68u1vy
Free Fortnite V-bucks Generator and V Bucks Ps4 and Vf7548
Free Tiktok Followers Generator and Tik Tokj and Xq1qfp
[DOLMWH] Eshop Us and Nintendo Cards Codes
Xbox Gold Gift Cards Free, Free Xbox One 50 Dollar Gift Cards and Ger Free Xbox One Gift Cards No Servey
Free Tiktok Followers Generator and Ti Tok and Xdj2we
0MPNL Paysafe Free Codes and Paysafe Codes
Free Gift Cards Generator Xbox, Free Xbox Gift Cards App and Free Xbox Gift Cards No Survey No Human Verification
does cash app give free money, where can i withdraw money from cash app for free and cash app giving free money
TJPML Coduri Paysafecard Free and Paysafecard Free Codes
Get Free Xbox Gift Cards for Free, Xbox 360 Free Gift Cards and Xbox Live Gold Gift Cards Free
Free Paysafecard and Coduri Paysafecard Gratis
free money on cash app real 2022, how to put free money on your cash app card and how to get free money on cash app real
Free Tiktok Followers Generator and How to Get Followers Quick on Tiktok and Ndrps5
Paysafecard for Free and Free Paysafe Code
Free PSN Gift Cards No Surveys and Are Free PSN Gift Cards Spam
Free Fortnite V-bucks Generator and Fornite V Bucks and 7tehqn
best way to get free money on cash app, how to get free cash app money no human verification and money app cash for free review
JC4MY Paysafe Buy Online and Cod Paysafecard
How to Get Free PSN Gift Cards and PSN Gift Cards Free
[I33UFK] Check Balance on Cvs Gift Card and Card Free
Free Tiktok Followers Generator and Buy 1000 Tiktok Followers and Q72b0t
how u get free money on cash app, how do you get money on cash app for free and free instant money on cash app
Paysafecard Codes and Paysafe Gratis
Free 100 Xbox Gift Cards No Surveys, Legit Free Xbox Gift Cards and Xbox Gift Cards Free No Surveys
Xbox Giving Out Free Gift Cards, Xbox Gift Cards Codes Free and How to Get Free Xbox Gift Cards Codes
[GAKX54] How to Get Free Eshop Codes and Check Nintendo Eshop Card Balance
real working free money cash app, send money for free cash app and cash app free money qr code
request free cash app money, free money in my cash app and cash app free money without human verification
earn cash app money free, free cash app money codes 2022 and cash app free money legit
[A6B3P8] European Gift Cards and Nintendo Eshop Qr Code Free
Free Tiktok Followers Generator and Comprar Seguidores Tiktok and 45x58a
how to get free money on cash app instantly, $2 000 free money cash app and free money cash app
HNI7V Paysafecard Codes Free and Free Paysafecard Codes
Paysafe 25 Lei and Cod Paysafe
Free Tiktok Followers Generator and Bot Likes Tiktok and Cirmn1
Free Xbox One Gift Cards, Free Xbox Live Gift Cards and Free Xbox One Gift Cards No Survey
Free Xbox 360 Gift Cards, Free Xbox Gift Cards Codes No Surveys and Free Xbox 360 Gift Cards No Surveys No Downloads
how to make money on cash app free, how to get free money on my cash app and where to get money off cash app card for free
Free Fortnite V-bucks Generator and Vbox Generator and Ghobp4
MV43T Paysafecard 50 Lei Gratuit and Paysafecard Buy Online