It's been a full two years since Liz Truss took the reins from Boris Johnson and helped wreck the UK economy in just a few weeks as PM. Trussonomics, with promises to cut tax, had dealt a hammer blow to the Tory party's long-held reputation for fiscal responsibility.
Liz Truss and Kwasi Kwarteng launched their ill-fated "mini" Budget and their optimistically labelled "Growth Plan" it set out the largest set of tax cuts since 1972, and carried an estimated cost of £60bn. The plans came with little indication of how the government would fund the policies, and without official costing from the fiscal watchdog, the Office for Budget Responsibility.
Already jittery markets were not reassured by Truss or her chancellor, and in the days that followed, UK assets sold off, and gilt yields spiked as prices fell. The yield on 10-year gilts soared by 120 basis points in the space of just a few days, and the UK pound fell to its lowest ever level against the dollar, hitting $1.04 on 26th September 2022. The drop in gilt prices reverberated through financial markets, and pension funds engaging in liability-driven investment faced a crisis when they were forced to sell assets to meet margin calls. The Bank of England stepped in, in the interests of financial stability, and purchased long-dated gilts to prevent a 'doom-loop' setting in. Planned quantitative tightening was temporarily suspended.
Perhaps most remarkably of all, this all happened within the space of just 45 days.
Truss left office in disgrace, but remains unrepentant. Meanwhile Rishi Sunak, a former chancellor himself, took up the reins as PM with a promise of "'integrity, professionalism and accountability at every level".
However in the nearly two years that followed he was unable to turn the boat around, managing only to turn it slightly away from Britain's ongoing economic downslide.
Britain's dire economic position is multifold. As Sunak continually pointed out throughout his disastrous election campaign, the COVID pandemic and the war in Ukraine and the resulting energy price surges had significantly affected Britain's economic position.
Inflation had risen dramatically at the point the pandemic hit and did eventually make a turn in late 2022 as Sunak took power. What Sunak also failed to overlook is that just as COVID hit, so did Britain officially leave the EU.
With it came extra costs, in terms of paperwork and customs declarations, and a gradual decline of much needed workers in a number of sectors.
Truss had come to power with a pledge to Save Brexit while Sunak, along with a number of others in his cabinet, maintained that Labour would reverse Brexit.
Some eight years after the EU referendum and four years since actually leaving the block, the reality of Brexit is becoming clearer.
While Trussonomics, COVID and the war in Ukraine have had an effect on Britain's economy, Brexit has arguably had a far more significant and long lasting impact.
The Office for Budget Responsibility (OBR) estimates that Brexit will cost the UK 4% of its GDP annually over the long term. This is equivalent to a cost of £32 billion per year to the UK taxpayer.
However Bloomberg found that Brexit is costing the UK economy £100 billion a year.
There are few metrics that point to any Brexit benefits. Johnson's Minister for Brexit Opportunities was often ridiculed and lasted only a few months without any luck in finding anything significant [Wikipedia / BBC].
Yet finding disadvantages and costs since Brexit is not so difficult. Lorry queues at Dover, Britain's biggest export hub, are a daily occurrence. The situation worsens during peak holiday times as travellers join queues often in excess of two hours. Much is primarily due to Brexit since as a third country Britain now has to submit to passport checks and stamps.
With de facto visas and biometric checks required in the coming months such scenes are likely to get worse over time.
The new Labour government have said they will spend £10.5 million to help ports prepare for the European Union's post-Brexit security checks for UK nationals entering the bloc and reduce the risk of queuing and disruption. But it may prove to be a small sticking plaster on what is a gaping wound.
This is an example of Labour's apparent inability to see the enormity of the problem. Fearful of scaring the Brexiteers away, Labour rubber stamped its manifesto with the bold statement that Labour would not rejoin the EU, the customs union or single market.
Yet it is precisely these factors that are impeding Britain's economic growth. Of course the rest of the world might offer some market opportunities, but even where Britain has managed to make deals beyond Europe, they are miniscule compared to the, now diminished, markets on Britain's doorstep.
Labour has talked of needing to repair a black hole in Britain's spending, and that overspending by the previous Tory administration has required them to make savings.
Yet savings announced so far amount to taking money from those who might least be able to afford it, that being pensioners, with Labour announcing that they will stop winter fuel payments to those not claiming pension credit or who are deemed to have significant assets.
The policy is expected to reduce the number of pensioners who receive the winter fuel payment from 11.4 million to 1.5 million, saving the Treasury £1.4bn this financial year [BBC].
That, according to Bloomberg's figures above, is 1.4% of what Brexit is costing the economy.
But there is of course no shift to rejoin. Only an attempt to 'move closer' to Europe as Keir Starmer met with his German counterpart Olaf Scholz in what was described as a "wider reset" with Europe [BBC].
Brexiteers and the right-wing press were overly excited claiming Starmer was about to undo or reverse Brexit. If only.
There might have been some remainers and rejoiners hopeful it was a change in position or that it might be a turning point in the road.
However, for anyone understanding the nature of the EU, Germany - nor any member country - can make a unilateral deal without it being signed off by the bloc as a whole.
Indeed in terms of clarification Starmer said that while he wants a reset in relations between the UK and EU, it "would not mean reversing Brexit or re-entering the single market or Customs Union".
Despite an element of positive thinking, Starmer was later criticised after rejecting a youth mobility scheme [Guardian].
Before the week was done and just days before MPs head back to parliament, Starmer spoke to reporters in the rose garden in Downing Street.
In his address he spoke of a "painful" Autumn budget and that "things will get worse before they get better" [BBC].
While this might have been welcome honesty, such a statement will do nothing for the economy. It might only precipitate further problems as consumers tighten their belts and stop spending, businesses put plans on hold and foreign investment errs on the side of caution.
So far there have been few signs of any direct reaction to Starmer's statement [BBC].
Liz Truss's mini-budget was delivered on 23rd September 2022 and within days caused turmoil. Rachel Reeves is not expected to deliver her budget until 30th October, the day before Halloween. There is already talk of increased fuel duty. And following leaks that Labour might declare war on smokers with an outdoor smoking ban, tax rises on tobacco might also feature [Sky News].
It remains to be seen what the fallout of Labour's fiscal policy is. But just short of 100 days in office they have made few friends, and quite a few enemies.
tvnewswatch, London, UK
Liz Truss and Kwasi Kwarteng launched their ill-fated "mini" Budget and their optimistically labelled "Growth Plan" it set out the largest set of tax cuts since 1972, and carried an estimated cost of £60bn. The plans came with little indication of how the government would fund the policies, and without official costing from the fiscal watchdog, the Office for Budget Responsibility.
Already jittery markets were not reassured by Truss or her chancellor, and in the days that followed, UK assets sold off, and gilt yields spiked as prices fell. The yield on 10-year gilts soared by 120 basis points in the space of just a few days, and the UK pound fell to its lowest ever level against the dollar, hitting $1.04 on 26th September 2022. The drop in gilt prices reverberated through financial markets, and pension funds engaging in liability-driven investment faced a crisis when they were forced to sell assets to meet margin calls. The Bank of England stepped in, in the interests of financial stability, and purchased long-dated gilts to prevent a 'doom-loop' setting in. Planned quantitative tightening was temporarily suspended.
Perhaps most remarkably of all, this all happened within the space of just 45 days.
Truss left office in disgrace, but remains unrepentant. Meanwhile Rishi Sunak, a former chancellor himself, took up the reins as PM with a promise of "'integrity, professionalism and accountability at every level".
However in the nearly two years that followed he was unable to turn the boat around, managing only to turn it slightly away from Britain's ongoing economic downslide.
Britain's dire economic position is multifold. As Sunak continually pointed out throughout his disastrous election campaign, the COVID pandemic and the war in Ukraine and the resulting energy price surges had significantly affected Britain's economic position.
Inflation had risen dramatically at the point the pandemic hit and did eventually make a turn in late 2022 as Sunak took power. What Sunak also failed to overlook is that just as COVID hit, so did Britain officially leave the EU.
With it came extra costs, in terms of paperwork and customs declarations, and a gradual decline of much needed workers in a number of sectors.
Truss had come to power with a pledge to Save Brexit while Sunak, along with a number of others in his cabinet, maintained that Labour would reverse Brexit.
Some eight years after the EU referendum and four years since actually leaving the block, the reality of Brexit is becoming clearer.
While Trussonomics, COVID and the war in Ukraine have had an effect on Britain's economy, Brexit has arguably had a far more significant and long lasting impact.
The Office for Budget Responsibility (OBR) estimates that Brexit will cost the UK 4% of its GDP annually over the long term. This is equivalent to a cost of £32 billion per year to the UK taxpayer.
However Bloomberg found that Brexit is costing the UK economy £100 billion a year.
There are few metrics that point to any Brexit benefits. Johnson's Minister for Brexit Opportunities was often ridiculed and lasted only a few months without any luck in finding anything significant [Wikipedia / BBC].
Yet finding disadvantages and costs since Brexit is not so difficult. Lorry queues at Dover, Britain's biggest export hub, are a daily occurrence. The situation worsens during peak holiday times as travellers join queues often in excess of two hours. Much is primarily due to Brexit since as a third country Britain now has to submit to passport checks and stamps.
With de facto visas and biometric checks required in the coming months such scenes are likely to get worse over time.
The new Labour government have said they will spend £10.5 million to help ports prepare for the European Union's post-Brexit security checks for UK nationals entering the bloc and reduce the risk of queuing and disruption. But it may prove to be a small sticking plaster on what is a gaping wound.
This is an example of Labour's apparent inability to see the enormity of the problem. Fearful of scaring the Brexiteers away, Labour rubber stamped its manifesto with the bold statement that Labour would not rejoin the EU, the customs union or single market.
Yet it is precisely these factors that are impeding Britain's economic growth. Of course the rest of the world might offer some market opportunities, but even where Britain has managed to make deals beyond Europe, they are miniscule compared to the, now diminished, markets on Britain's doorstep.
Labour has talked of needing to repair a black hole in Britain's spending, and that overspending by the previous Tory administration has required them to make savings.
Yet savings announced so far amount to taking money from those who might least be able to afford it, that being pensioners, with Labour announcing that they will stop winter fuel payments to those not claiming pension credit or who are deemed to have significant assets.
The policy is expected to reduce the number of pensioners who receive the winter fuel payment from 11.4 million to 1.5 million, saving the Treasury £1.4bn this financial year [BBC].
That, according to Bloomberg's figures above, is 1.4% of what Brexit is costing the economy.
But there is of course no shift to rejoin. Only an attempt to 'move closer' to Europe as Keir Starmer met with his German counterpart Olaf Scholz in what was described as a "wider reset" with Europe [BBC].
Brexiteers and the right-wing press were overly excited claiming Starmer was about to undo or reverse Brexit. If only.
There might have been some remainers and rejoiners hopeful it was a change in position or that it might be a turning point in the road.
However, for anyone understanding the nature of the EU, Germany - nor any member country - can make a unilateral deal without it being signed off by the bloc as a whole.
Indeed in terms of clarification Starmer said that while he wants a reset in relations between the UK and EU, it "would not mean reversing Brexit or re-entering the single market or Customs Union".
Despite an element of positive thinking, Starmer was later criticised after rejecting a youth mobility scheme [Guardian].
Before the week was done and just days before MPs head back to parliament, Starmer spoke to reporters in the rose garden in Downing Street.
In his address he spoke of a "painful" Autumn budget and that "things will get worse before they get better" [BBC].
While this might have been welcome honesty, such a statement will do nothing for the economy. It might only precipitate further problems as consumers tighten their belts and stop spending, businesses put plans on hold and foreign investment errs on the side of caution.
So far there have been few signs of any direct reaction to Starmer's statement [BBC].
Liz Truss's mini-budget was delivered on 23rd September 2022 and within days caused turmoil. Rachel Reeves is not expected to deliver her budget until 30th October, the day before Halloween. There is already talk of increased fuel duty. And following leaks that Labour might declare war on smokers with an outdoor smoking ban, tax rises on tobacco might also feature [Sky News].
It remains to be seen what the fallout of Labour's fiscal policy is. But just short of 100 days in office they have made few friends, and quite a few enemies.
tvnewswatch, London, UK
