The British Prime Minister Liz Truss sells herself as a free marketeer who believes in small government and economic liberty.
She founded the “Free Enterprise Group” of Conservative MPs, and co-authored Britannia Unchained – a book calling for sweeping pro-market reforms. A few days into her premiership, she announced major tax cuts, noting that “the economic debate for the past 20 years has been dominated by discussions about distribution” but “what I’m about is growing the economy”.
All this stands in stark contrast to her energy policy. Truss recently announced that households’ energy prices will be capped for the next two years – a measure that’s expected to cost the tax-payer £170 billion, or even more. (I must have missed the chapter on price caps in Britannia Unchained.)
The true scale of Truss’s bailout is documented in new report by the Bruegel thinktank.
Researchers identified all the measures that have been announced by European governments to “shield households and businesses from the energy crisis” up to September 21st. They then added up the costs of those measures to obtain a total for each country. Results are shown below:
As you can see, the U.K.’s figure is by far the highest – both in absolute terms and as a percentage of GDP. An important caveat is that the figures only include measures announced so far. It’s likely that more will be announced over the coming months, which will presumably reduce the disparity between the U.K. and the rest of Europe.
In total, the 28 countries have earmarked almost half a trillion Euros for the energy crisis. As one of the Bruegel researchers told Bloomberg, “This is clearly not sustainable from a public finance perspective”.
If both Europe and Asia get a mild winter, we may come out of this crisis relatively unscathed – at least until next year. (Note that colder temperatures in Asia mean more competition for LNG, regardless of temperatures in Europe). But if the winter isn’t mild, costs could soar even higher.
“Growing the size of the pie,” Truss’s key economic objective, won’t be easy when we’re borrowing billions every month just to keep the lights on.
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Redefining the meaning of terms is all the rage these days. Haven’t you noticed? Rebate, bonus, non-taxable income – whatever it’s called, spend it while you can before it’s market value collapses.
Just to remind everyone that “vaccine” was redefined recently too.
And “pandemic”.
Having got into this entirely predictable mess with energy, I’m afraid I dont see any other good solutions that try to mitigate its worst effects as best you can on one side, and try to secure new supplies and lower costs on the other. Its the classic ‘Buggers Muddle’. I’m encouraged by the green light of fracking, and the Chancellors statement this morning. I hope we will see the repeal of Green Taxes and subsidies, and of the manipulations of electricty prices in the coming days and weeks.
She’s buying the win of the next GE.
Simple.
With our own money.
Of course, as always.
And the Covid and Ukraine related squandering of hundreds of billions was just the dry run for this and more climate change related squandering.
The resulting debt explosion and inflation will devalue that debt, but also eventually make it unserviceable, leading to hyperinflation, the collapse of the currency and ultimately the institution of a new one.
Then, we can restart.
Off a much poorer base, of course.
The bright spot of this is that the civil service&co incl. its pensioners will see its size, income and influence collapse to the proper level with and after that collapse, as, for decades, only what the public sector earns can be used to fund it, and/as borrowing will be unavailable even at then high interest rates.
See Germany from 1945-1970s as the blueprint.
The challenge will be to stay on a libertarian course instead of succumbing to a Keynesian one once the real and healthy growth phase comes to an end, like they unfortunately did in the 70s.
She’s certainly trying to.
The whole purpose of this is to bankrupt & collapse economies so that the country can be ‘saved’ by the bankers with a digital currency linked to UBI & all the rest of the scam.
It’s how the US has operated in developing countries for decades… All in the aim of control of assets.
It just doesn’t make sense to me, all this financial help for households, while welcome for many, is shaking a money tree that by all accounts is dead and ready for the chop. I really can’t see this ending well for the ‘man in the street’ (as they used to say). What amazes me is the government goes about wrecking the economy irretrievably with a certain sort of relish, like it’s a race to the bottom.
Oh, and I think we are going to have a cold winter too from what I have been reading, due to a huge volcanic eruption earlier this year (Tonga, January I think) which has put massive amounts of water vapour in the air – however, if this does happen it will all be blamed on us useless humans and our ’emissions’, natch.
….and all when there is no shortage of coal, gas or oil!!
just think how much worse it would be if they were really in short supply….?
I want to say clown world..but it’s so much more serious than that…I just can’t help but see it as a concerted effort to kill millions and send many more millions into squalor and poverty….
“I just can’t help but see it as a concerted effort to kill millions and send many more millions into squalor and poverty….”
Mass deaths followed by poverty and enslavement for the survivors. That is my summary of Agenda 2030.
Looks like things are going according to plan then.
We should impose a windfall tax of 80% on MP’s who voted for Net Zero. Until such time as it is repealed.
Great idea. And 100% for all the time they voted in favour of lockdowns etc.
This tax payer funded price cap must be one of the most expensive election gimmick (GE in 18 months) ever. What disgusting depths of scamming the Tories have descended to. We should expect more of the same in the run up to the election.