As UK’s Truss fights for job, new finance minister warns of tough decisions ahead
It’s been a turbulent period of time for British politics and the Prime Minister Theresa May is hanging on to her post by only a few inches. In order to alleviate the economic and political crisis and to improve her standing, she was forced to dismiss Kwasi Kwarteng as her chief of staff at the Treasury. Former Conservative chief William Hague has said that Truss’s leadership is hanging on a slack’ and it’s easy to see why. In order to calm the financial markets who have been in chaos for three weeks now Truss cut portions from her controversial economic plan and removed Kwasi Kwarteng.
1. Did there exist an economic or political issue that led to Kwasi Kwarteng’s sacking?
Recent years have seen the United Kingdom has experienced an economy-wide and political crisis which is causing the demotion of Kwasi Kwarteng. Global financial crises in the years 2008 and 2016, as well as the Brexit referendum, which followed both caused this current crisis. This led to a decline in faith in the country’s economy and an increase in inflation and unemployment. The UK government has responded to the current crisis through a series of tough decisions, including tax increases and spending cuts. The consequences of these decisions are an overall decline in standards of living and an increase in the rate of poverty.
2. What does the demotion of Kwarteng and the demise of the economic package do?
The firing of Kwarteng and the ending of the economic package were meant to show the UK that government is serious about making tough decisions when confronted with uncertainty in the economy. In the hope that, by taking these actions, it would encourage businesses and customers to invest and spend and increase the size of the economy.
It’s clear it is evident that Jeremy Hunt is willing to adopt difficult decisions in order to save this Truss administration. Hunt has indicated that the tax cuts he cut will be reversed by his predecessor and will increase his tax revenues. It will be interesting to see whether this will suffice to end the Truss administration however it’s certainly an improvement in the direction.