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Saturday, October 1, 2022

Liz Truss is new PM, RIP Queen Elizabeth II & Welcome to Charles III

 Liz Truss is new UK Prime Minister

No surprises there. She was selected by members of the conservative party (there are 160,000 of them) who are largely white, middle class and old. Not remotely representative of the UK population. So let's take a look at her past record and her performance in her first three weeks in office:

Her Past Record
  • As a student at Oxford University, she was a prominent Liberal Democrat and advocated the abolition of the monarchy (must have been a warm meeting with the Queen on September 6th)
  • Under David Cameron's Conservative government (she had switched by then) she was Secretary of State for Environment, Food and Rural Affairs and advocated that the UK should remain in the EU.
  • Under Boris Johnson she switched to become a Brexiter and had a number of senior Ministerial roles
  • As Secretary of State for Foreign, Commonwealth and Development Affairs, she "felt entitled to fly to Australia and back in a large UK government private jet at the taxpayer’s, and the planet’s expense. Rather than taking equally convenient scheduled Qantas flights, she spent £500,000 of public money and generated 500 tonnes of CO2." Simon Calder, The Independent, 2nd September 2022
  • She has said she will abolish the green levies that make up part of our energy prices

Her first 3 weeks as PM:
  • Liz Trust demonstrates her environmental credentials on the first day of her premiership by taking a private plane to Scotland and back, just to spend 10 minutes with the Queen. Boris Johnson made the same trip a few minutes earlier but flew separately. How much did this cost the taxpayer? How much CO2 did they emit for a totally unnecessary journey? Do they realise just how badly they are behaving?
  • Announcement of her Energy Plan to shield households from the extreme increase in costs that were due to take place in October and to be funded through further borrowing, not taxes
  • Suspension of Parliament after just a few days to allow for a mourning period until after the Queen's funeral
  • Suspension of Parliament 3 days later for the Party Conference season
  • First budget last Friday under Kwasi Kwarteng, the new Chancellor of the Exchequer appointed by Truss. Market reaction is abysmal: Sterling drops to its lowest against the USD since, well ever*!! , huge new borrowing required to fund tax cuts across the board but mostly for the rich, likely to lead to higher interest rates due to more imported inflation with lower value of sterling. Michael Brown of Caxton said: "the market’s message on the Budget is clear; it doesn’t believe that betting the farm on tax cuts fuelling economic growth is a coherent, rational economic strategy, instead viewing it as one that will end in disaster."
  • On September the 28th, in an unprecedented move for a G7 country, the IMF issued the UK a warning following the mini budget "However, given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy" 
Can this new government under Liz Truss really be even more incompetent that the previous on under Boris Johnson? Well the markets seem to think so.

Kwasi Kwarteng's first budget is almost universally derided as an economic disaster

Perhaps the last 12 years of conservative government can be summarised by this comment in the New York Times on September 29th:
"For some experts, the pound’s journey indicates a decline in economic and political influence that accelerated when Britain voted to leave the E.U. in 2016. In many respects, Britain already has the worst performing economy, aside from Russia, in the 38-member O.E.C.D."

Rest In Peace Her Majesty Queen Elizabeth 2nd

Perhaps I shouldn't be surprised by the outpouring created by this long expected event. After over 70 years representing the UK, Her Majesty Queen Elizabeth II passed away on Thursday September 8th. 

The country pretty much came to a standstill in many areas. The major TV channels replaced programmes with coverage of the funeral preparations, the lying in state in Edinburgh and then in London, interviews with anyone they could find who claims to have known her and people queuing for hours to pay their respects. Monday the 19th, the day of the funeral was declared a public holiday, extra trains were laid on so people could get to London to attend the procession. Businesses, schools and shops were shut. Hospitals cancelled operations. Ordinary people's funerals were postponed. People who protested during the events being held in towns and cities over the country were arrested. Big Stuff!

Was the right thing to do? There certainly appears to be a great deal of public support for the Queen although it's always hard to measure. And the British usually run these official events with a remarkably impressive clockwork precision. All the finest livery and pomp was on display.

King Charles III signing the accession papers

Alongside the funeral is the accession of King Charles III. Will he make a great king? Will the monarchy survive? Who knows. All I can say is that I believe he will be better than Charles I who was executed, and Charles II who spent vast amounts of taxpayers money on his frivolous indulgences but managed to keep his head on.

Six word summary from The Economist on how Britain changed under 70 years of Elizabeth II:
"Fewer children, fewer coalminers, less cabbage"

*On Monday Sept 26th, Sterling dropped to its lowest level against the U.S. dollar in history. It fell to $1.0350, sliding below $1.04 for the first time ever.

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