Just 38 days ago, the world was celebrating the appointment of Kwasi Kwarteng, a Ghanaian descent and the first Black British minister of finance (chancellor) and now he was sacked by the Prime Minister Liz Truss that appointed him to the position.
The quickness that the team of Kwasi Kwarteng and Prime Minister Truss return to conservative economic policies and Thatcherite radicalism brought about the destruction of British economy, British pound and subsequently the fall of Kwasi Kwarteng.
Kwasi Kwarteng presented a mini-budget that deepened the cutting of taxes to high income earners and big corporations, thus squeezing the middle and working classes to further financial stress. The market reacted and immediately the British pound was losing its values while the bond and stock markets were in deceleration due to the depressing market forces.
“UK Prime Minister Liz Truss fired her finance minister Kwasi Kwarteng and ditched a central plank of economic policy Friday, just three weeks after their discredited growth plan crashed the value of the pound and UK government bonds, and drew rebukes from the International Monetary Fund and ratings agencies.
The crash forced the Bank of England to intervene to prevent a market meltdown with an emergency £65 billion program of bond-buying and new facilities to help banks and pension funds secure cash.
That bond-buying is supposed to end on Friday, but the former chief economist of the IMF, Raghuram Rajan, says Bank of England Governor Andrew Bailey will need to proceed very cautiously.”
Prime Minister Liz Truss after dumping her Chancellor, she may be the next.
This radical model of conservative economic policy rooted on lower taxes and cutting taxes for the rich in the era of high inflation has been discredited by many people from both right and left, and IMF has never been in favor of it.
“Throughout the campaign, economists, investors and prominent Tories warned that Ms. Truss’s promises of tax cuts were reckless at a time of double-digit inflation. Michael Gove, a former Cabinet minister, dismissed them as a “holiday from reality.” Now, dissident Tories are plotting ways to force Ms. Truss out of office. “