He was warned, but he did it anyway

Kwasi Kwarteng was explicitly warned by the OBR that the UK economy was heading into big trouble, but he launched his Kamikaze mini-budget anyway

On September 23rd 2022 Kwasi Kwarteng blew up the UK economy with a massive package of unfunded tax cuts and handouts for the mega-rich.

The situation was exacerbated by the fact he didn’t include any analysis or economic projections from the Office for Budget Responsibility (OBR), meaning institutions, investors, and individuals had to try to work out for themselves what the impact would be.

The instability he caused was so bad that he almost bankrupted Britain’s private pension funds, which had to be rescued with a £62 billion bailout from the Bank of England (an enormous figure which puts the £1.3 billion to reverse the obscene Tory two-child policy into a bit of perspective).

Kwarteng’s decision to exclude the OBR was widely perceived as a sign of his economic recklessness, and the chaos his Kamikaze budget triggered ended up bringing down the Liz Truss government just seven weeks after she took over from Boris Johnson.

What we didn’t know at the time was that when Kwarteng assumed office, the OBR had provided him with an explicit warning that the UK was heading towards big trouble.

In the aftermath the OBR attempted to hide this warning from the public, but the Information Commissioner’s Office recently over-ruled them, and ordered them to disclose what they told him.

The evidence is absolutely damning.

The OBR warned Kwarteng that extraordinarily high energy prices were likely to drive the economy into a recession towards the end of 2022, and that government borrowing would have to rise by £21.8 billion above their previous projections for the next five years.

They warned him about "elevated risks to economic and fiscal prospects at present", stated that "there are several risks that could significantly worsen this outlook" and concluded that "policies that your government announces in the coming weeks will have potentially large impacts on economic and fiscal outcomes".

It’s absolutely clear that they were advising Kwarteng to be cautious, but he decided to outright ignore these warnings and push ahead with a wild and uncosted £160 billion package of tax cuts, knowing that the public finances were already in such a mess.

It’s well understood that tax cuts for the rich, like scrapping the top rate of Income Tax, are incredibly inefficient at creating good economic returns.

When the government cuts taxes for poor people they inevitably spend the money back into the economy, creating more economic demand. The richer the recipients, the more likely it is that they’ll have a tax lawyer to help them stash their extra income in overseas tax havens, gamble it on the property speculation or the stock market, or waste it on imported luxury goods like yachts or sports cars.

Despite being told that there was a huge hole in the public finances, Kwarteng decided to reduce the government’s tax take anyway, in order to lavish handouts on the already wealthy.

And in hindsight it’s absolutely obvious why he decided not to have the OBR calculate the economic impact of his Kamikaze budget.

They’d just told him bad economic news, so following the Brexiteer mantra that "we’ve had enough of experts" he decided to ignore their advice, marginalise them from the process, and do his own thing.

In the wake of all this needless chaos, Kwarteng and the Tory party have been allowed to get away with it. The Tories clung onto power by promoting Rishi Sunak to Prime Minister, and Kwarteng simply refuses to comment when approached by media outlets about the explicit warnings he was given before he decided to set fire to the economy.

Meanwhile Britain ran a budget deficit of £132 billion in the financial year 2022-2023, which is eight years after George Osborne and David Cameron promised their agenda of wage repression and austerity ruination would have completely eliminated it!

How much longer are the British people going to let these reckless economically-illiterate failures continue running the economy into the ground?