As we prepare for the govt’s budget, this article in the guardian asks if austerity is really necessary: Jeremy Hunt’s austerity budget: necessity or political choice?
Photograph: Matthew Horwood/Getty ImagesPhotograph: Matthew Horwood/Getty ImagesJeremy Hunt is preparing to wield the axe over public spending this week and raise taxes for everybody in anthat will be long on pain and short on good news. After Liz Truss’s short and catastrophic premiership, the “abacus economics” she despised is back in the ascendancy under Rishi Sunak.
Yet some experts have cautioned that there is nothing inevitable about the new era of austerity Hunt appears to be preparing to usher in, and that there are other ways both of raising money and of keeping the markets sweet.
“What we’re seeing is a rush from a £45bn fiscal loosening, with the Truss budget, to a £60bn tightening being floated with the current government,” he adds. “You’re talking about a £100bn swing in fiscal policy, in response to a set of bond market moves that we don’t fully understand.
He argues it was fears of surging inflation, as higher government spending fed into demand, that really spooked investors, pushing up bond yields and, in turn, mortgage rates.
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