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25-09-2022, 03:43 PM
September 24, 2022
6:01 PM GMT+8
Last Updated a day ago
By Andy Bruce and Lindsay Dunsmuir
LONDON, Sept 24 (Reuters) - Britain's new economic agenda represents the biggest gamble for growth in a major Western democracy in at least 40 years, for which the chance of success fell instantly as investors ditched sterling assets.
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Investors reacted with dismay to the combination of free spending, unfunded tax cuts and huge increases in government borrowing announced by finance minister Kwasi Kwarteng on Friday.
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"I've rarely seen an economic policy that is as uniformly panned by economic experts and financial markets," said Harvard professor Jason Furman, former chair of the U.S. Council of Economic Advisers during Barack Obama's presidency.
"It shockingly came in below the low expectations that almost everyone had," he added.
......
"It's probably the epitome of casino macroeconomics," said Jacob Kirkegaard, nonresident senior fellow with the Washington- based Peterson Institute for International Economics think tank.
......
Buiter said he could think of few historical parallels for Britain's new fiscal approach, even if there were superficial similarities with the tax-cutting Thatcher years.
Britain's Institute for Fiscal Studies compared Kwarteng's statement to a budget in 1972 that similarly sought to double Britain's rate of economic growth, but is widely remembered as a disaster for its inflationary effect.
Furman doubted that Truss would be able to implement her plans before running into some economic hard truths, as happened to Ronald Reagan in the early 1980s.
The U.S. Republican president was forced to U-turn on a major tax-cutting drive as the U.S. Federal Reserve jacked up interest rates.
https://www.reuters.com/markets/europe/b...022-09-24/
6:01 PM GMT+8
Last Updated a day ago
By Andy Bruce and Lindsay Dunsmuir
LONDON, Sept 24 (Reuters) - Britain's new economic agenda represents the biggest gamble for growth in a major Western democracy in at least 40 years, for which the chance of success fell instantly as investors ditched sterling assets.
......
Investors reacted with dismay to the combination of free spending, unfunded tax cuts and huge increases in government borrowing announced by finance minister Kwasi Kwarteng on Friday.
......
"I've rarely seen an economic policy that is as uniformly panned by economic experts and financial markets," said Harvard professor Jason Furman, former chair of the U.S. Council of Economic Advisers during Barack Obama's presidency.
"It shockingly came in below the low expectations that almost everyone had," he added.
......
"It's probably the epitome of casino macroeconomics," said Jacob Kirkegaard, nonresident senior fellow with the Washington- based Peterson Institute for International Economics think tank.
......
Buiter said he could think of few historical parallels for Britain's new fiscal approach, even if there were superficial similarities with the tax-cutting Thatcher years.
Britain's Institute for Fiscal Studies compared Kwarteng's statement to a budget in 1972 that similarly sought to double Britain's rate of economic growth, but is widely remembered as a disaster for its inflationary effect.
Furman doubted that Truss would be able to implement her plans before running into some economic hard truths, as happened to Ronald Reagan in the early 1980s.
The U.S. Republican president was forced to U-turn on a major tax-cutting drive as the U.S. Federal Reserve jacked up interest rates.
https://www.reuters.com/markets/europe/b...022-09-24/
