By Charlie Kimber
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Tax cuts mean austerity

This article is over 1 years, 6 months old
Tory tax cuts for the rich and the bosses might be good for some, but will mean suffering and austerity for ordinary people
Issue 2824
Kwasi Kwarteng economics inflation bank cuts Tory

Kwasi Kwarteng will back the rush and make cuts (Picture: Flickr/ Number 10)

The mini budget is just the start of a longer-term strategy of slash and burn. At some point the financial markets will demand that the Tories show evidence of preparing to fund tax cuts by slashing spending.

So although it wasn’t announced last week, the tax handouts for the rich will inevitably be “balanced” by more assaults on key public services and wages. The Times newspaper reported on Monday, “Millions of public sector workers face a two-year pay squeeze.”

It said the government has abandoned plans for a new spending review which was designed to upgrade money for services because of soaring inflation. Instead these budgets, and the money set aside for pay deals, will stay as it is.

It’s a policy of taking money from the NHS, care service and education and transferring it to corporations. Kwarteng has already said that while he was handing cash to the rich he wants to see government debt starting to fall. 

Theoretically that could happen if there was tearaway growth in the economy.  But the Resolution Foundation thinks that hitting his target “requires spending cuts of £36 billion in 2026-27, assuming tax rises have been ruled out.” 

And the British economy is either in a recession already or is headed for one. That’s not a scenario for major growth. So the mini-budget implies another round of sustained austerity.

The Bank of England has only one weapon to deal with inflation—jacking up interest rates.  That will mean devastating increases in mortgages that will also see landlords drive up rents. 

And there will be more business closures and unemployment. This Tory strategy will only succeed for the ruling class. 

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