Some will say that the recent fiscal statement was nothing more than an ill conceived and rushed attempt at exciting the electorate and it must be said that it all appeared very much like a fire sale delivered by the Chancellor in just under 30 minutes. However, there is no doubt that Kwasi Kwarteng is an exceptionally bright young man and in truth there was nothing unexpected when you read the book he co-authored with Liz Truss, Dominic Raab, Priti Patel, and Chris Skidmore which was released in 2012 titled “Britannia Unchained”.
The text sets out their vision for the United Kingdom’s future as a leading player in the global economy, arguing that Britain needs to adopt a far-reaching form of free market economics, with fewer employment laws and suggesting the United Kingdom should learn lessons from the business and economic practices of other countries, including Canada, Australia and the tiger economies of the Far East like Taiwan, Hong Kong and Singapore.
This fiscal statement re-established the entrepreneurial landscape of the UK electing to encourage aspiration and was a blatant attempt to boost productivity and the GDP of the UK. It’s delivery on the morning of the 23rd of September 2022 was met with a grimace from the money markets with a 3.5% reduction of the pound versus the US dollar and placing pressure on the Bank of England to further hike interest rates to reduce inflation.
It marked a clear departure with the staid and unexciting economics and politics of the past and sets out a clear intention that the UK will maintain and improve its position in the world by being a major exporter and home to financial markets worldwide. The intended drop in the value of the pound moves Sterling closer to parity with other major currencies. It removes the benefit of a strong currency related to imports and creates a hugely competitive currency for exports. Governments have for certainly the past 30 years, singly benefited from the rise in Asian productivity and their desire for international inclusivity which with their low production costs have controlled the march of inflation but has forced our nation of shopkeepers to focus on overseas supply routes and less on the home-grown variety. In fact, I was staggered to hear Labours, Stella Creasey MP, argue in favour of European supply networks when quite simply our membership of the EU this past 43 years has simply stolen employment opportunities from the working man.
Brexit and concerns related to manufacturing control and security linked to China are the game changers in what is fast becoming a nationalist world. The support for Bankers was also clearly calculated. Removal of Prime Ministers aside, our nation is a glowing example of democracy at work and a safe haven for investment and it is better to have Banks and Bankers domiciled in the UK enjoying the relative security of a safe environment for investors. You would want as many as possible considering the sound investment opportunity that the UK represents as the country post Brexit, sets sale on a new nationalist manufacturing tide.
The cost-of-living crisis has clearly been addressed with the energy cap announcement and a weak sterling exchange rate will unquestionably impact import prices which will impact food and clothing costs and filter through to an unfavourable impact on wage packets. But we must not forget the 1.3 million jobs on offer by businesses, for the first time higher than the level of unemployment set against the number of welfare claimants and the need to encourage employment over welfare. Equally grotesque is the way in which the desire by the UK government to support civilians in this way was used by a Chinese Ambassador to justify their treatment of the Uighur people in China. I am sure that it is now desired that a growing, vibrant, low tax economy, would serve to encourage people into work and reduce the cost of welfare to the country.
It’s also important to recognise that Prime Minister Cameron created the opportunity for a Nationalist UK mindset by opening the doors to Brexit, Prime Minister Johnson in the eyes of the electorate got that job done and it is hoped that Prime Minister Truss will unleash the potential that our own destiny in the World now provides. Crazy fiscal statement or considered economic judgement, history will always be the judge of that, but just as Keynesian Economics has made its way through the politics of the past Kwasinomics could equally be seen as responsible for setting this country on a new road to our future.
About the Author
Adrian Hawkins OBE was awarded his honour by the Queen in the 2021 New Years Day Honours list for his services to business. A lifetime businessman, Adrian Chairs biz4Biz a business support organisation which he founded 11 years ago to create a business network in the Home Counties. Adrian is also the Managing Director of Welding World, Chairman of the Hertfordshire LEP Skills and Employment Board and Chairman of the Stevenage Development Board. Adrian has 40 years’ experience in the world of business.