The British pound collapsed like a plum pudding. And it looks like Liz Truss won’t have an answer to that anytime soon. Truss wants to regulate the economy through tax cuts, but only the rich benefit from this.
The UK was already dealing with a sharp rise in inflation and a declining pound. Add to that the recent economic plans of the new Prime Minister, Liz Truss.
Not a good start for Truss
The average Brit is angry, says reporter Lea van Buechhoeven. The announced historic tax cuts of at least €45 billion have been criticized. “This amount was not passed on,” says van Beckhoven. “So it is not known how this money will be recovered.”
The richest 5 percent of the population will benefit from this new plan, says van Beckhoven. The rich are now getting richer and the poor are getting poorer. These rich people are basically keeping their hands on their money, says former writer and correspondent Peter D. Ward. “They only spend it on stocks.”
Plan from the eighties
So Truss wants to save the economy with tax cuts. “In doing so, it moves away from the idea that the economy should be distributed as fairly as possible. Gear’s point is that the benefits that the very wealthy get, that five percent, trickle down very slowly to the rest of the country,” van Buchoven says. “This is a plan from the 1980s and it has not been investigated whether that would actually happen.”
Yesterday, the Bank of England decided to “temporarily” buy British government bonds to lower high interest rates. This puts the new government in more trouble.
Charles on the banknote
“I predict to you: if King Charles III appears on the banknote, the pound sterling may no longer be worth a dollar or a euro,” says former correspondent de Ward.
“When Elizabeth was crowned, Great Britain was still ruling the waves and the pound sterling consisted of 20 shillings 12 pence each. In Holland one pound had to be paid more than 10 guilders. In the United States a pound sterling cost $2.80.”
In the UK itself, people will of course notice the crisis. And although we will feel the crisis there in the Netherlands less than before due to Brexit, de Ward believes we will start to notice it. “Dutch products are very expensive in Great Britain. For example, a lot of vegetables come from Holland,” says de Waard.
“If I may speculate, my prediction is that if Truss continues to make such a mess of things and gets voted out, her successor may want to join the EU again. As they wanted to join in the 1970s when things got worse,” de Waard says. “We hope Ursula von der Leyen and Frans Timmermans will make it clear to the British that they have to join the queue after Turkey, Moldova and Ukraine.”
“Twitter junkie. Lifelong communicator. Award-winning analyst. Subtly charming internetaholic.”