Sunak or Truss

[Glyn_Wigley]

Presumably by cutting VAT!

[BillyStubbsTears]

Truss cite Patrick Minford as her economic expert.

God f**king help us if she is serious.

He's only had the ear of 1 PM. That was Thatcher in the early 1980s. The result was 15% interest rates, 4 million on the dole and the destruction of much of our industry.

Minford's fantastic plan to take advantage of Brexit was for us to unilaterallly do away with all import tariffs. He casually noted in an aside that this would probably finish off what industry we have left, and would require the "managed decline" of Northern cities.

He is a maverick in economics circles. Way outside the mainstream. But your likely next PM is listening to him.

[Nudga]

I think Sunak should make his wife pay back the £600k± in VAT plus the furlough money of her failed businesses before he leaves the Chancellors job.

[BillyStubbsTears]

Truss also blithely says the last 20 years of economic policy haven't delivered growth, and it has been the fault of the economic consensus.

This is either breathtakingly ignorant, or one of the most deliberately misleading things I've ever heard from a senior politician.


1) Growth was trotting along just fine 15-20 years ago. A steady 2-3% per annum, which was the long term average.

2) Yes, it took a big hit in the GFC, but that happens in big recessions. The key is: how do you get back on course.

3) The huge consensus of economic opinion was that we should prioritise Govt support to the economy to get things firing again. The Tory Govt of which SHE was a f**king member, totally ignored that opinion and went for balls out Austerity. THAT is why our growth has been so awful for the past decade. Now she's doing a Big Brother job, re-writing the past to blame other people.


Truss would be a Godsend for Labour. She would be out of her depth as PM and she would lead the Tories to disaster in 2024. But I hope to God that we don't find out. Because with what she's been saying on the economy, she would wreak havoc on us between now and then.

[SydneyRover]

She, Truss is being written off as bonkers

[River Don]

The problem we have is, in the main that gas and oil have become more scarce, thanks to the actions of Russia and the sanctions the west has applied.

So unless we find more affordable energy to replace it (OPEC isn't being helpful, I wonder if they can actually meet the demand anyway?) , then I can't see that much can be done about inflation. It's imported and it's out of our hands. We'll see the truth of this in October when energy prices are raised again and that feeds another hike in inflation.

If Truss cuts taxes that will be inflationary. If Sunak does nothing much then we're heading for recession anyway.

[SydneyRover]

The main problem is we have two people more concerned with their own futures now, and the future of the tory party at the next election rather than the future if the country and those in it, it all sounds a bit familiar really.

[River Don]

Well Gordon Brown is about the most selfless politician I can think of and his suggestion is a coordinated International plan for growth. He can see inflation and recession is coming simultaneously.

But this plan amounts to an international response to get energy prices down... With the geopolitical situation as it is, that's not easy.

[ravenrover]

I think Sunak should make his wife pay back the £600k± in VAT plus the furlough money of her failed businesses before he leaves the Chancellors job.

You do know he is no longer Chancellor, Nudga?

[BillyStubbsTears]

There's an unpleasant but unavoidable fact associated with the increase in external prices (external as in things we import to the UK, like energy, semi-conductors, some foods, some manufactured goods).

If there is less supply of those goods, then either buyers fight more for them and the price goes up (inflation) or we suppress demand for them by consuming less which means our economic activity goes down (recession or at the very least, suppressed growth).

There's basically no getting away from that. Either way, we as a nation are effectively poorer than we thought we were.

There's a case that you can ride this out if you think the price rise will be temporary by Govt borrowing more and giving it to people to help them out. That's effectively borrowing a bit from your future wealth to get you over an immediate problem. But if you do that, you should be targeting the support at people who really need it because they will go under otherwise. Better off people can pull their belts a bit. What you don't want to do is to massively encourage wider consumption that will push up prices generally.

Truss's tax cuts are the very worst way of dealing with this problem. They basically give money mainly to people who are precisely the ones best able to cope. So it will subsidise holidays and new cars and expensive clothes and house prices. All the things that will push up inflation generally.

[River Don]

They are forcasting four years of elevated inflation now.. It's not temporary and really it's very difficult to predict just how long this will go on for. The Ukraine war seems to have no foreseeable end. Covid is still rife and China keeps locking down in response.

[drfchound]

Truss also blithely says the last 20 years of economic policy haven't delivered growth, and it has been the fault of the economic consensus.

This is either breathtakingly ignorant, or one of the most deliberately misleading things I've ever heard from a senior politician.


1) Growth was trotting along just fine 15-20 years ago. A steady 2-3% per annum, which was the long term average.

2) Yes, it took a big hit in the GFC, but that happens in big recessions. The key is: how do you get back on course.

3) The huge consensus of economic opinion was that we should prioritise Govt support to the economy to get things firing again. The Tory Govt of which SHE was a f**king member, totally ignored that opinion and went for balls out Austerity. THAT is why our growth has been so awful for the past decade. Now she's doing a Big Brother job, re-writing the past to blame other people.


Truss would be a Godsend for Labour. She would be out of her depth as PM and she would lead the Tories to disaster in 2024. But I hope to God that we don't find out. Because with what she's been saying on the economy, she would wreak havoc on us between now and then.

Never mind, Ms Abbott will sort everything out afterwards.

[River Don]

Dominic Cummings says Truss is "as mad as a box of snakes"

He claims Johnson is backing her, in the hope that when things inevitably go wrong it will open the way for his return.

[Nudga]

I think Sunak should make his wife pay back the £600k± in VAT plus the furlough money of her failed businesses before he leaves the Chancellors job.

You do know he is no longer Chancellor, Nudga?

Yeah, I did forget he'd already stood down.
Does my point still not stand?

[big fat yorkshire pudding]

Well it could BST in some ways. An NI cut for example would save businesses (assume 1% on both parts) as well as boosting peoples incomes.  That 1% can be passed straight on to customers and bring prices down. That's not an insignificant amount. Cut fuel duty, similar thing happens. Of course obvious question how do you pay for that given the wage growth demands of the public?  Perhaps the fiscal headroom built could be used more widely.

[Bristol Red Rover]

It will be an interesting ride for the next two years. Both have little chance of an election win. So it's all about doing their thing meanwhile.

Sunak is one king of slime. He'll be giving more money to his matesand then doing as much to prop up an elitist economy, bringing in measures that will take a long time to unravel. He's a souless classic Tory arse. He's the safe bet, but also a sure loser when it comes to electability.

Truss is bonkers, kinda from the same school of chaos leadership as Johnson just less Eton. Also has the marraige instability of Johnson. That in itself might be appealing to the public.  Anyone pulling her strings is going to have a hard time keeping her in line but then these real rulers of our country have their ways. I'd be very surprised if she doesn't win the leadership, and will believe in winning the next election.

If Starmer can't destroy either of these he should walk the plank.

[BillyStubbsTears]

Doesn't work like that though BFYP. That's an accounting view of prices, not a macroeconomic one.

Inflationary pressure occurs when there is too much money actively seeking too few goods. That tends to manifest itself as an increase in prices, but it doesn't necessarily follow that a decrease in prices results in lower inflation.

A tax cut or an increase in Govt spending puts more money into circulation. So, by definition, it is adding to the amount of money chasing the goods. If suppliers can expand their capacity, that's fine - the increase in money will result in the market seeing more goods available to be bought, as suppliers chase that extra money. The inflationary pressure results in more economic activity than would otherwise have occurred.

If  someone tries to grab that money through putting up prices, another supplier will increase output at the same or lower unit cost and undercut them. That's how you deal with a demand problem - you create demand by getting money into the economy. (1).

But we currently have a supply problem. The key goods (food, manufactures, energy) are in limited supply. There's plenty of demand. The problem is that demand cannot be satisfied. And the way the market deals with that is that suppliers put up prices. Because they can charge more for each f the limited things they sell.

Sure, a reduction in NI would reduce a company's costs. But why should they pass that onto the consumer? There's no shortage of demand, so the prices can stay high. Or, if some producers do drop their prices to reflect the tax cuts, that just leaves more money in consumers' pockets to bid up the price of other goods. The inflationary pressure is there and is always increased by the addition of money into circulation.

(1) This is what WAS happening before the Austerity insanity - The Brown Govt cut taxes and spent more to put money into circulation to boost demand that had been hammered by the GFC. When the Tories came to power, they immediately increased VAT and cut Govt spending drastically - the result was that demand was strangled and we had three years of flatlining.

[Donnywolf]

Dominic Cummings says Truss is "as mad as a box of snakes"

He claims Johnson is backing her, in the hope that when things inevitably go wrong it will open the way for his return.

I'm amazed that Raab can insult anyone. Deffo people with Glass houses with him

The sea was closed. Plank

[tyke1962]

Truss has opened up a 24 point lead over Sunak in the early opinion poll .

[wilts rover]

Truss has opened up a 24 point lead over Sunak in the early opinion poll .

Sunak just been interviewed by Andrew Marr on LBC.

'The favorite name for you among Conservative voters is Stabber Sunak because they believe you brought down Johnson. How do you expect to win them over?'

He has two chances. Slim and not a.

[Sprotyrover]

I think Sunak should make his wife pay back the £600k± in VAT plus the furlough money of her failed businesses before he leaves the Chancellors job.

You do know he is no longer Chancellor, Nudga?

Ha yes Browns Bottom! And the raid on the Uk Pension funds great precursors of the 2008 Collapse!

[Sprotyrover]

They are forcasting four years of elevated inflation now.. It's not temporary and really it's very difficult to predict just how long this will go on for. The Ukraine war seems to have no foreseeable end. Covid is still rife and China keeps locking down in response.

Folks are not being helped by the Woke Policies generated by the Left wing elitist minority's controlling EU policies, you also have the actions of the Crackpot US government, the likes of Bidens green Policies shutting down an oil and Gas Pipeline which would have enabled a further 1.5 Million barrels of oil and Gas to be shipped to refineries in the American midwest, The Canadian Government can't even export Oil and Gas to us as their reserves are in the West and they never bothered building any infrastructure to enable export to Europe, then you have years of mismanaging their foreign policy towards Left socialist Venezuela to such an extent that the country fell on its knees and the population had to leave en masses to avoid starvation. The Oil production infrastructure is so poor that they can barely produce 600,000 barrels per day that's the country with the largest oil reserves in the world, between them Canada and Venezuela have nearly 500 billion barrels of oil, 6 times more than Russia! The fat cats in Brussels have sleep walked into that crisis throwing all their eggs into one basket! Things are so bad Biden has had to pay a visit to that Pariah state Saudi Arabia and virtually kiss backsides to try and get them to increase production.

[SydneyRover]

Yep sprot much rather have nutjobs running Austerity as an economic cure-all wouldn't you? in fact it would be good for you to show what has happened economically over the past 12 years or so that you would repeat. What we could be doing with those hundreds of billions lost to brexit aye?

[SydneyRover]

'' ............. This is rich, in every sense of the word. Raising taxes on big American corporations and the wealthy would not fuel inflation. It would slow inflation by reducing demand – and do it in a way that wouldn’t hurt lower-income Americans (such as those living in, say, West Virginia).

Manchin’s state is one of the poorest in America. West Virginia ranks 45th in education, 47th in healthcare, 48th in overall prosperity and 50th in infrastructure.

Tax revenue from corporations and billionaires could be used to rebuild West Virginia, among other places that need investment around America .......... ''

https://www.theguardian.com/commentisfree/2022/jul/20/joe-manchin-democratic-party-kick-out

A bit more of this which is a state based levelling up suggestion from Robert Reich who appears to have a bit of a grasp of economics, is sunak brave enough?

[River Don]

Whilst Canada and Venezula have large reserves of oil, in both cases it's tight oil that is difficult to extract. In these times of high oil prices, the potential is there but there is the risk prices may fall back again. So how much effort is being made to ramp up production?

The big problem Europe faces right now is the gas supply, which it is currently heavily dependant on Russia. Europe doesn't yet have the infrastructure to import the vast quantities of LNG required. How long will it take to build this infrastructure?

Whilst gas remains scarce in Europe, energy bills are going to remain high. Gas is also used to manufacture artificial fertiliser, so we can expect high food prices too. The heatwave across the continent won't be helping agriculture either.

Saudi and OPEC aren't riding to the rescue, though all has fallen back a bit lately, largely on fears of a slowdown in China.

Anyway, all this demonstrates that a large part of the inflation we are feeling is coming from international events that are largely beyond the control of Westminster.

[big fat yorkshire pudding]

BST your post was a bit too generic and I'm fully aware of supply/demand.  It isn't one size fits all is it?  Certain parts of the economy will see significant demand falls as disposable income drops and cutting the expenditure and price of these goods would be a huge benefit to those companies.  Companies will pass it on because they want to see largely increases in sales, again though that will be situational.  A big factor in that is confidence, consumers will return to bigger companies and staple buys when they see a spending squeeze and discretionary spending will drop.

Perhaps the answer to cut the costs is to target it more where it needs it, IE fuel, energy and the areas of the economy with much higher elasticity within it's pricing where the discretionary spend creeps in (who's buying a fireplace right now for example?)

[BillyStubbsTears]

BFYP

Sorry to hammer this, but I'm afraid you are just  misunderstanding how inflation works. It's really, really simple on the macro scale.

If there is an increase in the amount of money available, and no increase in the amount of goods available to be bought, the price of those goods goes up. That's Macroeconomics101. You're getting tied down in a lower level, where you can make a case that in a specific sub-sector, yes prices can in theory be reduced by taxes being reduced. But that cannot apply to the economy as a whole.

[Nudga]

Missing a trick here, the government and treasury could save a fortune by simply employing BST as PM, Chancellor, Business Secretary, Home Secretary, Foreign Secretary, Environment Secretary and Covid Minister.

[Bentley Bullet]

He could have BobG in his cabinet as Minister For Trying To Sound Smart.

[River Don]

If a thing is scarce, like gas, then people who need it will bid up the price  to secure a supply,. Give people more spare cash and they can afford to spend more to outbid the competition. It's that simple.

Truss is proposing to give people more cash but the supply of things they need is constrained. Inflation, right there.