The mini budget was ill-timed and ill-advised | Burnley Council leader Afrasiab Anwar column
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The cap on bankers’ bonuses was lifted, a planned corporation tax rise was scrapped, the top 45% tax rate that had applied to people earning over £150,000 a year was abolished and the stamp duty thresholds were raised so that the minority of people wealthy enough to still be able to buy a home paid less in tax.
Even the basic rate of tax, lowered to 19% will mostly benefit people earning £50K a year. It will do nothing to help those on low wages who pay no income tax and will struggle the most. Ultimately, most hardworking residents in Burnley will be worse off or see no benefit at all.
The mini budget has raised fears that the cost of imports of food, clothes, and other essentials that make up a much higher proportion of the spending of households on lower incomes will increase. All the tax cuts are unfunded, requiring the government to increase borrowing which makes interest rate rises more likely thus increasing the costs of mortgages.
To reduce borrowing, cuts to public services are inevitable. Added to that, it is the taxpayer and future generations who will end up footing the bill.
Almost all the measures announced on Friday were to benefit the richest, increasing inequalities by making already poorer families poorer still. It appears the government has given up on its promise of Levelling Up and replaced it with a policy of Trickling Down economics.
What we have seen since the much-anticipated mini budget is a crisis of the government's own making as the situation spirals out of control. The announcements triggered chaos across financial markets, and the pound fell to a 37-year low, just three days later plunging to its lowest ever value against the dollar.
The IMF took the extraordinary step to issue a statement saying it is monitoring the situation and 'does not recommend large and untargeted fiscal packages at this juncture'. The IMF has also raised concerns that the tax cuts which will disproportionately benefit high earners, will increase inequality, and has urged the chancellor to provide targeted support and reverse the tax measures.
The Bank of England has also had to intervene, to calm markets, fearing the drop in the value of the pound would wipe out our pension funds, which would have been disastrous. The whole thing has been ill-timed, fiscally irresponsible, and ill-advised.
People will be deeply concerned about the impact of this on their mortgage, pension, and the cost of living. This is a self-inflicted crisis because of the government's reckless actions.
Since the announcement, the prime minister is nowhere to be seen. Those that voted for her and cheered for Kwasi Kwarteng in the House of Commons when he made his statement have a lot to answer for.