Everyone expected tax cuts from Kwasi Kwarteng and Liz Truss, this pair who have simply come out of the blue from the Tory leadership race to play with the nation’s train set.
But their sheer audacity and the scale of this mega mini-budget left the Commons slack jawed.
Kwarteng took visible pride in abolishing the cap on bankers’ bonuses, relished the biggest tax cuts for the rich since the 1970s, funded by £45 billion of borrowing on you and me. Any sane government would want their winter’s tale to be about energy support for the nation’s homes and businesses.
This lot are happy to have the focus on bonuses for bankers and London estate agents in the form of a stamp duty cut. Trade unions and benefit claimants, meanwhile, will be shackled by more rules.
A lot of the budget was “except for viewers in Scotland” because tax rates and house sales are set at different rates here.
Raising of a visible tax border in the UK will lead to obvious pressure of a ‘race to the bottom’.
One of Kwarteng’s biggest announcement was the scrapping of the top rate of income tax meaning the wealthiest will pay a rate of just 40p instead of 45p in England.
In Scotland those earning over £150,000 pay 46p in the pound. Scots earning £43,663 to £150,000 will continue paying 41p.
Nicola Sturgeon may say this budget is “morally bankrupt” but she now has to balance if will Scottish voters would prefer tax parity over paying for better welfare support.
Scotland isn’t really shielded at all by the separate tax raising powers of the Scottish parliament. For the bigger picture look at this Tory slash and burn approach to finances from the other end of the global telescope.
Brexit has cut the UK adrift from the biggest trading block in the world. The UK, including Scotland, looks very much alone on the international stage. Cutting taxes to draw multi-national investment, a kind of Singapore strategy, also attracts the sharks of global finance.
The pound has fallen sharply against the dollar as currency speculators sniff weakness in all this borrowing. It will cost more to service our debts, inflation could become a runaway train.
Borrowing billions to put on the roulette wheel’s black number 10 is, at best, a massive gamble. At worst it will run the economy off the tracks by Christmas, or even by the time of the Tory conference.
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