Why investors hate the UK PM’s biggest tax cuts in decades

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The Bank of England is tapping the brake, Liz Truss is hitting the accelerator. Nobody knows which way the economy will go, and the markets want to get off.

| Britain’s new prime minister, Liz Truss, has a penchant for cosplaying Margaret Thatcher. But so far, there isn’t much policy resemblance to her fiscal disciplinarian idol.

Removing the top rate of tax just hands more money to those who already have plenty, rather than unlocking consumer spending power.Cutting stamp duty will merely increase the price of houses, rather than boost money in people’s pockets. This is the bit economists will watch with morbid fascination. If the levers of economic policy are being pulled in opposite directions - or, to use another mechanical metaphor, if you are hitting the brake and the accelerator at the same time - what happens?

But a government tax-cutting and energy-spending binge will be highly inflationary if nothing is done to ease supply pressures. Reaganite conservatives would welcome all this largesse and optimism. Thatcherite conservatives will be wondering how, and when, it all gets paid for.Kwarteng’s bet is that his policies will stimulate growth, and growth will fix the budget.

Source: Financial Digest (financialdigest.net)

 

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A lesson for 'no one left behind' AlboMP & JEChalmers 240 billion in high income tax cuts or 240 billion invested in life changing services like Medicare, NDIS,Aged,hospitals,social housing,retire debt. No budget issues Jim when 240 billion blown on high income tax cuts. smh.

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