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Massive tax cuts and increased spending, another visit to Reaganomics. Markets react negatively.
Quote:
The announcement Friday featured a volume of tax cuts not seen in Britain since 1972 and an unabashed return to the “trickle-down economics” promoted by the likes of Ronald Reagan and Margaret Thatcher. The radical policy moves set the U.K. at odds with most major global economies against a backdrop of sky-high inflation and a cost-of-living crisis.
The fiscal package – which includes around £45 billion in tax cuts and £60 billion in energy support to households and businesses over the next six months – will be funded by borrowing, at a time when the Bank of England plans to sell £80 billion in gilts over the coming year in order to scale back its balance sheet.
The Bank of England have plans to raise interest rates from 2,2% to around 4%, with a possible further rise to 6%, this should help increase the value of the pound, and hep stabilise it.
It also should be noted that other major currencies such as the Euro and Yen have seen dramatic lows, as hav Australian, New Zealand and Canadian dollars.
The two most popular economic formulas for trying to kick start an economy are Keynesian, which involves Government public spending and often required the printing of money, thereby devaluing currencies, and monetarism (Chicago School) and which is often known as supply side economics, and usually involves trying to kick start the economy through tax cuts.
You can take your pick but neither is perfect, however given the pandemic borrowing, energy price capping, stagflation and a global recession, the entire world has economic difficulties.
The OP continues to display an over simplistic view of economics that is rooted in blathering talking points.
From the article...
The shock to markets came largely from the scale of tax cuts and absence of offsetting revenue or spending measures, which raised concerns about the country's fiscal strategy and policy mix, according to Barclays Chief U.K. Economist Fabrice Montagne.
The British lender expects the government to clarify its plans to balance the books through "spending cuts and reform outcomes" ahead of the November budget statement, which Montagne suggested "should help to deflect immediate concerns relating to large unfunded tax cuts."
Tax cuts aren't funded. That money never gets to government.
Spending needs to be adjusted based on projections of revenue.
Depending on the environment set by the government, tax cuts can generate more tax revenue because individuals and companies have more money to spend.
The Bank of England have plans to raise interest rates from 2,2% to around 4%, with a possible further rise to 6%, this should help increase the value of the pound, and hep stabilise it.
It also should be noted that other major currencies such as the Euro and Yen have seen dramatic lows, as hav Australian, New Zealand and Canadian dollars.
The two most popular economic formulas for trying to kick start an economy are Keynesian, which involves Government public spending and often required the printing of money, thereby devaluing currencies, and monetarism (Chicago School) and which is often known as supply side economics, and usually involves trying to kick start the economy through tax cuts.
You can take your pick but neither is perfect, however given the pandemic borrowing, energy price capping, stagflation and a global recession, the entire world has economic difficulties.
Spending is critical since people are unable to pay their bills, government support is required. But to add in massive tax cuts not seen in decades seems wrong, the markets reacted and many economists are critical of the move.
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Quote:
Originally Posted by Goodnight
Spending is critical since people are unable to pay their bills, government support is required. But to add in massive tax cuts not seen in decades seems wrong, the markets reacted and many economists are critical of the move.
Professor Patrick Minford, was Thatcher's economist and is now advising Liz Truss.
Spending is critical since people are unable to pay their bills, government support is required. But to add in massive tax cuts not seen in decades seems wrong, the markets reacted and many economists are critical of the move.
You said - government support is required since people can't pay their bills.
Tax cuts allow people to keep more of their own money to help people pay their bills.
Tax cuts allow businesses to keep more of its own money so that more workers can be hired - which not only helps those workers pay their bills as well... it may actually help the supply chain and bring more products to the shelf for people to buy. Sounds like trickle down economics to me.
The problem is that governments accumulated a crushing load of debt through liberal/social policies, deficit spending. It's unsustainable and will ultimately break. It has a failure rate of 100% throughout history.
Tax Cuts work, just ask, well Reagan (led to the biggest economic boom in the 1990s, along with a balanced budget, thanks to Newt Gingrich in Congress).
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