Liz’s legacy: crashing pound and pensions, housing crisis, inflation, unemployment. What’s to be done?
Liz Truss: “Duh… what did I do?”
Economist Richard Murphy has given his verdict on the result of Liz Truss and Kwasi Kwarteng’s new economic direction for the UK – and it is damning.
But he has also done something far more important; he has suggested ways forward for the UK. Principal among those is making sure the Conservative Party is never allowed into power on its own again, so it can never again ruin the finances of millions of people for the benefit of a few spoilt rich kids.
It’s the first positive series of suggestions This Writer has seen.
See what you think – and be sure to send those thoughts in via the comments section:
Six days after Kwarteng gave the worst budget in living memory, where are we? A summary thread…
— Richard Murphy (@RichardJMurphy) September 29, 2022
The UK’s final salary pension funds nearly failed yesterday. It has cost £65 billion to bail them out, much of that going to people who are better off, overall.
— Richard Murphy (@RichardJMurphy) September 29, 2022
Official interest rates are set to rise to 6% if market expectation is followed, meaning mortgage rates of 7.5%. I suspect half of all those with mortgages will not be able to pay anything like that. Rents are going to skyrocket as well. A housing crisis is likely.
— Richard Murphy (@RichardJMurphy) September 29, 2022
Rising interest costs on top of massively increased energy costs and a collapse in consumer demand are going to hit hundreds of thousands of businesses very hard. Maybe that many will fail, and with that unemployment is going to increase, a lot.
— Richard Murphy (@RichardJMurphy) September 29, 2022
Pensioners and those on benefits are not going to get the inflation-linked rises that were expected next April, even though their financial positions are profoundly perilous.
— Richard Murphy (@RichardJMurphy) September 29, 2022
London financial markets will probably never recover from this mess.
— Richard Murphy (@RichardJMurphy) September 29, 2022
There is no good news in here.
— Richard Murphy (@RichardJMurphy) September 29, 2022
Second, because we cannot afford a general election as yet, having already had months without a government this year, a cross-party coalition will need to stabilise the country. I sincerely hope this can be achieved.
— Richard Murphy (@RichardJMurphy) September 29, 2022
That government would have to commit to serve the people of this country and not financial markets.
— Richard Murphy (@RichardJMurphy) September 29, 2022
It will have to commit to higher public spending – knowing that much of this will pay for itself by delivering tax paid, improved productivity and positive multiplier effects as state employees spend their wages.
— Richard Murphy (@RichardJMurphy) September 29, 2022
There will be a need for higher taxes on the well-off. Wealth will need to be taxed considerably more. This is not for revenue: it is time to reorder British society so that it is no longer structured to serve an elite, but everyone.
— Richard Murphy (@RichardJMurphy) September 29, 2022
The Bank of England will have to be instructed to reduce interest rates as fast as is possible to save the domestic economy from ruin: again, if inflation is the consequence, so be it. We cannot afford the devastation of mortgage failures.
— Richard Murphy (@RichardJMurphy) September 29, 2022
Investment in the green economy will have to be advanced rapidly – for its own sake and as an import substitute and then to create an export market.
— Richard Murphy (@RichardJMurphy) September 29, 2022
The financial markets will need a quiet revolution: the use of savings for speculation has to end if state subsidy for pensions and other savings is to be enjoyed.
— Richard Murphy (@RichardJMurphy) September 29, 2022
And we need to rethink what is valuable. The idea that markets are good and the state is bad is nonsense. We have to create an economy where there is a genuine partnership.
— Richard Murphy (@RichardJMurphy) September 29, 2022
Truss and Kwarteng have proved that yesterday was a very long time ago. We’re not going back there. We should not want to. But it will need big vision and courage to go forward. I hope some politician has it.
— Richard Murphy (@RichardJMurphy) September 29, 2022
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