Shortly after taking over as the new U.K. prime minister, Liz Truss announced plans to fight inflation by capping household energy prices over the next two years. Blimey! Billed as the most free-market prime minister since Margaret Thatcher, Truss' first major move is a counterproductive scheme that will prolong the United Kingdom's energy woes and increase its budget deficit. What could go wrong?
"Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again," Truss declared. When you hear phrases like this, beware of bad policies on the way. Starting in October, the government will limit the energy prices charged to households for two years and businesses for six months. It will make up the difference to utility companies with subsidies paid for with borrowed funds. The cost of this boondoggle is forecasted to be over $120 billion.
