Have you noticed that virtually all male leaders – from elected prime ministers to murderous tyrants – wear a suit and tie these days? Whatever happened to juntas in military attire adorned with made-up medals or the classic Mao jacket?
My hunch is that dressing like a (male) chief executive brings a veneer of respectability to even the most despotic of dictators – pinstripe washing, if you will. And you know what they say, dress for the popular mandate you want, not the illegitimacy you have. It’s a similar deal with fiscal credibility.
This morning, the chancellor announced that the fiscal event previously known as the Medium Term Fiscal Plan is no longer taking place on 31 October. In a sort of last-minute upgrade to premium economy, it is now to be a full-blown Autumn Statement and will go ahead on 17 November. This benefits from not only not being Halloween, but also RuPaul’s 62nd birthday (who may be hoping for a fracking U-turn as a present.)
The government has good reason to delay. A two-week pause could save it billions, as the timing of the event impacts OBR forecasts on borrowing costs, which have fallen back from their peak in the aftermath of the mini-budget. Newsnight’s Ben Chu reckons this could reduce the size of the fiscal black hole by £6bn.
Crucially, Jeremy Hunt enjoyed the flexibility to postpone the fiscal statement because the markets are significantly less jittery than they were following that mini-budget. Indeed, such is the change in atmosphere that gilt yields barely moved following today’s announcement.
To be clear – this is how things should be. It is not normal for a high-income country such as the UK to be making emergency fiscal statements with back of a fag packet calculations and to a timetable set by the markets and the next meeting of the Bank of England’s Monetary Policy Committee. But a return to relative stability is what the Rishi Sunak premiership is all about.
Now for the bad news. Bloomberg reports that the black hole is still in the region of £35bn. Given the events of the autumn so far, there may be attempts to overcorrect – that is, to implement swingeing spending cuts and tax rises that would cause unnecessary harm to the economy and hardship on ordinary people. That would be a mistake.
Before the ‘elsewhere in the paper’, it may be useful to clarify where that ‘black hole’ comes from and why it isn’t a set amount. It is based on the government’s own fiscal rule, to get debt falling as a percentage of GDP in the medium term. It is those rules – often trumpeted but rarely met – that require the fiscal tightening.
Governments can of course modify fiscal rules in response to a crisis such as Covid. But as the OBR dryly notes, there is a risk to changing fiscal rules when the fiscal outlook changes, rather than adjusting policy to meet the rules. As we’ve all borne witness to in the last few weeks, if you weaken the rules and thereby lose the confidence of the markets, you’ll quickly wish you hadn’t.
Elsewhere in the paper, foreign secretary James Cleverly appeared to say the quiet part out loud, in calling on LGBT football fans to “compromise” ahead of the Qatar World Cup. Meanwhile, if you were after PMQs analysis, our Political Editor Nicholas Cecil has you covered.
In the comment pages, Ayesha Hazarika says Sunak’s appointment made British Indians proud, but that you cannot declare professionalism and integrity only to bring back Suella Braverman.
Lauren Innes, an emergency ambulance crew member and UNISON activist, says she hates to strike but that ambulance workers face a crisis point.
While Homes and Property Editor Prudence Ivey reflects that if recent events have shown us anything, it’s that hardly any of our housing is completely secure.
And finally, now 31 October is free of fiscal statements, we can go out and enjoy it in the usual manner. Reveller Editor David Ellis knows how all the cool kids are celebrating Halloween in the capital.
