In England, thanks to a new finance minister, relations are on the mend, but it’s not yet clear whether peace will return, says Arnott Boot, professor of entrepreneurial finance and financial markets at the University of Amsterdam. Looks like a settling in week.
He talks about ‘default week’, in which he compares the appointment of Jeremy Hunt as Chancellor of the Exchequer to ‘a kind of Johan Remkes bringing in’. That’s what the Volkschrant wrote. He is going to do what needs to be done with economic policy very calmly. You have to state what your plans are, how you handle income and expenses, how you’re doing today and tomorrow.’
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However, Booth did not think that Hunt would reverse the entire set of financial activities of his predecessor, Kwasi Kwarteng. It will be more nuanced. ‘By some strange move, everyone thinks the collection is complete nonsense, but there are also meaningful things in it,’ says Boot. ‘For example, it has to do with investments in infrastructure. Hunt is going to make the policy that you have to do as a politician, and I hope that we in the Netherlands can take an example from that.
How not to do it
According to Boot, the Netherlands could take an example from the United Kingdom on what not to do. “We’ve seen that over the last few weeks. Let’s see how we can do it from now on.’ He notes the mutual struggle between government policy and central banks: ‘That’s the side effect, the collateral damage. But it’s really colossal.’
Boot argues that central banks need to be fairly autonomous institutions dependent on support. ‘They are companies that are supposed to have a certain reputation that we can trust, but they really put the brakes on. To bring inflation under control. But at the same time – as in the UK and the Netherlands – central banks’ policy is stymied if unimaginable amounts of money are spent by governments without thinking about coverage.
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The opening continues: ‘Because politicians don’t want to admit it, they will initially throw mud at central banks. So in the end there are losers on both sides, of which the country or its inhabitants actually bear the brunt.
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