This is Iain Martin’s weekly newsletter, exclusively for Reaction subscribers.
Congratulations to the Treasury on winning the battle for supremacy in British national life. Along with its partner the Bank of England, HMT is back in charge under the new Chancellor Jeremy Hunt and the Prime Minister, Rishi Sunak, who was at the Treasury until July, when he resigned from the government led by Boris Johnson.
During the brief interlude of the Truss-Kwarteng dynasty, there was talk of ending “Treasury orthodoxy.” Critics say the low growth Treasury is too focused on projections from the Office for Budget Responsibility, and on raising taxes to fill black holes that, if you’re not careful, end up becoming self-fulfilling when those higher taxes whack confidence, activity and growth. Those of a more centrist disposition are simply pleased some orderly policy-making has been restored under Hunt and Sunak, after the wildness of the summer and autumn.
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While George Osborne imposed fiscal tightening on an economy that was growing, Jeremy Hunt’s tightening will hit an economy that is in recession.
The policy will help Starmer to present the Conservative party as remote, rich and out of date.
The PM has done the easy bit in calming the markets but now he needs to set out how to reform public services.
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Subscribe to Reaction and receive unlimited access to the site, our daily email with analysis every evening and invites to online events.
© Copyright 2022 Reaction Digital Media Limited – All Rights Reserved. Registered Company in England & Wales – Company Number: 10166531.