At the gates of hell in Dante’s Inferno, the inscription says, “Abandon all hope, you who enter hither.” It is what comes to mind when I consider the latest Budget.
What encouragement for the concept of the free enterprise may be found there? What incentive is there to strive and exert effort?
In September 1959, Winston Churchill told his constituents, “Among our socialist opponents, there is an enormous misunderstanding. Some of them view private enterprises as dangerous predators that must be shot.
Others view it as a cow that they can milk. A select few recognize it for what it truly is: the powerful and eager horse that pulls the wagon.
The story goes that things needed to become more stable and the economy need stabilization. But there is absolutely no vision for the future.
Much of the last Budget’s discussion of ‘black holes’ are unfounded, and the notion that the British economy cannot sustain its costs in the medium term is absurd.
If there was any volatility, the Bank of England was substantially responsible. First, by increasing interest rates by 0.5% rather than 0.75%%. This destabilized markets.
Then, the quantitative tightening was announced on the same day as Kwasi Kwarteng’s mini-Budget. It compounded the miscalculation by failing to intervene decisively in the LDI fiasco – the pension funds’ funding crisis – Then, the quantitative tightening was announced on the same day as Kwasi Kwarteng’s mini-Budget.
It compounded the error by failing to intervene decisively in the LDI catastrophe, the pension fund funding crisis when it could have ensured that the support was permanent rather than temporary, allowing market speculators to move in.
That is, without continuing quantitative easing long after it should have ended and permitting the LDI crisis to evolve to the level that it did.
Finally, monetary policy is under control. The money supply is no longer expanding, and interest rates are reasonable. Domestic inflation is finally being constrained, yet the economy is already in recession.
A fiscal squeeze on top of this was unneeded, and raising taxes during a recession is completely counterintuitive. As a result, a considerably deeper recession will ensue. Numerous small firms, the lifeblood of the economy, will vanish, and any future recovery will be significantly tempered.
Brexit is being challenged, and before we know it, the United Kingdom will be back in the European Union. The situation in the European Union is worse than it is in the United States. The inflation rate is comparable to ours, growth is nonexistent, and the energy situation is worse.
Since we departed, nothing has been done, in part because of Covid, but primarily because of the hesitation of public workers and the government’s helplessness. European regulations do not need to remain on the statute books and our economy is largely aligned with that of the EU.
Raising the corporate tax rate at a time when you are attempting to attract investment in the country is a basic error, and this is true from the perspective of both internal and external investment.
The abandonment of business zones in regions of the nation in need of investment is also detrimental since it weakens the newly-created duty-free ports and makes them less appealing to investors.
Treasury contends that these measures just move investment from one region of the country to another, resulting in a temporary loss of tax revenue. But that is not the case. Creating new businesses and jobs in places devoid of either will yield enormous returns in the medium run.
I constructed the Verdura resort in Sicily on 550 acres of land with two kilometers of shoreline in an area with no economic chances. The resort employs 500 people directly.
Upon granting me honorary citizenship, the mayor of Sciacca, the local municipality, stated that over a thousand small enterprises had been founded as a result of Verdura. I would not have considered the development without a big government grant, but as a result, the region is reaping enormous benefits.
Back in Britain, personal tax levels were already too low before the most recent Budget and have been made worse by being frozen for six years – and, in the case of the highest rate of tax, lowered – a scandal that has been extensively covered in The Mail on Sunday.
The affected parties are not wealthy. They may be considered wealthy by others, but the Treasury is now taking advantage of their hard work. In the United States, for instance, the highest tax rate is 32%, and it does not apply until a person earns $500,000 per year.
Here, aspirants are taxed at a rate of 40 percent at a little over £50,000, a category into which many more will be drawn due to the twin curses of static thresholds and rising inflation.
We are discussing junior and middle management. What motivation do they have to work harder?
I could continue, but the budget was fundamentally opposed to the development of a business economy. Liz Truss and Kwasi Kwarteng’s intentions were correct. Here at least came a glimmer of hope, as we moved away from the economic policies of the previous two decades.
Their eagerness to implement them, as well as the actions of the Bank of England that I have detailed, necessitated their termination. The so-called establishment is against them regardless, therefore they probably would not have been permitted regardless of the conditions.
We are informed that we are now in the care of adults. Numerous adults I know have never accomplished anything in their life, have lacked desire, and have been content to go with the flow.
In the 1970s, when the country was in a greater state of disarray than it is today and when the decline was accepted, there were many adults.
It required a visionary to change the situation. Unfortunately, Mrs. Thatcher does not appear to be present today.
