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2/3 tax cuts she suggested were actually supported by labour previously. I think the mistake is more a massive communications and timing issue. She really shou

2/3 tax cuts she suggested were actually supported by labour previously. I think the mistake is more a massive communications and timing issue. She really should have announced these cuts in a staggered way, with better communication for the markets. It would have been fine. But she really screwed up on getting the political communication right.

mytailorisrich 4y ago
No funding and incomprehensible timing of abolishing the 45p rate were IMO fatal for the markets and public opinion. worryingly it also seems that nothing was discussed with the BoE beforehand. But keeping the corporation tax at 19% was the right move, IMO.
actionablefiber 4y ago
That 1/3 makes a pretty huge difference... And more importantly she was announcing these policies at an exact time when the Bank of England was trying to raise interest rates and sell bonds to fight inflation. So you have the government and the central bank pursuing contradictory goals: one trying to jumpstart consumption by borrowing and spending and the other trying to cool it by raising the cost of borrowing and reducing spending. This lead to a lot of wasted time, money and efforts and really destroyed the government's credibility.
- neilwilson 4y ago
  It wasn't a contradictory goal. The sect Truss belongs to considers that aggregate demand is solely a matter for the central bank to sort out, and that it has to respond to the fiscal setting of the government. Not the other way around. This is enshrined in law at s11 of the Bank of England Act 1998. "In relation to monetary policy, the objectives of the Bank of England shall be— (a)to maintain price stability, and (b)subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment."
  - actionablefiber 4y ago
    The BoE had to completely flip its policy to rescue pension funds which were getting margin calls because of Truss and Kwarteng's mini-budget destroying the gilt market, so I guess you're right.

mytailorisrich 4y ago

No funding and incomprehensible timing of abolishing the 45p rate were IMO fatal for the markets and public opinion. worryingly it also seems that nothing was discussed with the BoE beforehand. But keeping the corporation tax at 19% was the right move, IMO.

actionablefiber 4y ago

That 1/3 makes a pretty huge difference... And more importantly she was announcing these policies at an exact time when the Bank of England was trying to raise interest rates and sell bonds to fight inflation. So you have the government and the central bank pursuing contradictory goals: one trying to jumpstart consumption by borrowing and spending and the other trying to cool it by raising the cost of borrowing and reducing spending. This lead to a lot of wasted time, money and efforts and really destroyed the government's credibility.

neilwilson 4y ago
It wasn't a contradictory goal. The sect Truss belongs to considers that aggregate demand is solely a matter for the central bank to sort out, and that it has to respond to the fiscal setting of the government. Not the other way around. This is enshrined in law at s11 of the Bank of England Act 1998. "In relation to monetary policy, the objectives of the Bank of England shall be— (a)to maintain price stability, and (b)subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment."
- actionablefiber 4y ago
  The BoE had to completely flip its policy to rescue pension funds which were getting margin calls because of Truss and Kwarteng's mini-budget destroying the gilt market, so I guess you're right.