The Macroeconomic Challenges Facing the Sunak Government: From Debacle to Tentative Stability
This article starts by looking at the macroeconomic economic challenges faced by the Sunak government when it came into office in October 2022. It succinctly discusses the public spending legacies of the Covid pandemic, before examining the ambitious, yet reckless Growth Plan which Chancellor Kwasi...
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| Publicat a: | URI:https://journals.openedition.org/osb, |
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| Autor principal: | |
| Format: | Article ou chapitre numérique |
| Idioma: | Anglais |
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Observatoire de la société britannique
2024
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| Accés en línia: | Accès Université d'Orléans et IFPM Accès Université d'Orléans et IFPM |
| Sumari: | This article starts by looking at the macroeconomic economic challenges faced by the Sunak government when it came into office in October 2022. It succinctly discusses the public spending legacies of the Covid pandemic, before examining the ambitious, yet reckless Growth Plan which Chancellor Kwasi Kwarteng presented to the House of Commons on 23 September 2022. The extravagance of the Plan led to sharp sell-offs of UK government bonds and the pound, while almost provoking a financial crisis. This was averted by Bank of England intervention and major policy U-turns, which Liz Truss initiated in the last days of her short premiership. They were then substantially consolidated by the Sunak government at the end of 2022 and throughout 2023. While sense and calm have been restored to government policy – after years of hype and boosterism following the Brexit referendum result – the article goes on to examine the broader context of the Sunak government’s economic policies. It notes that the era of ultra-low interest rates is over, and that the surge in inflation which began in mid-2021, while largely overcome, is far from being over. This will have significant consequences for the cost of borrowing – by government (but also by the private sector) – as pressures on key areas of spending (related to demographic ageing and defence) rise. |
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