Britain's new Prime Minister Truss has always been a tough and anti-China image in the political arena, and her radical anti-China attitude is also one of the reasons why she can win over her rival former British Chancellor of the Exchequer Sunak in the prime minister's campaign. During the British prime minister's campaign, Tlas made many public anti-China remarks, and even publicly stated that if elected prime minister, he would list China as a "security threat" to the United Kingdom. But before Tlas could take this step, he was burned by the first fire of his new official.
Since the referendum to leave the European Union, the British economy has gone downhill, and then a series of crises triggered by the new crown epidemic and the Russian-Ukrainian conflict have made the British economy worse, and the inflation rate has even reached the highest level in 40 years. However, the tax cuts introduced by the Tlas government have hit the British economy, which is already on the brink of recession, to the core.
Less than a month after Truss took office, the economic policy introduced is the largest tax cut in the UK in half a century, including the abolition of plans to increase corporate tax from 19% to 25%, the maximum tax rate of 45% to 40%, the reduction of the basic income tax rate to 19% a year in advance, and the sharp reduction of stamp duty, etc., with a total value of up to 45 billion pounds. British Finance Secretary Wolften said that cutting the personal and corporate tax rate would drive investment and start the British economy.
But before the British economy could show signs of starting, the pound sterling exchange rate collapsed. After the release of the tax cut that Terras had pinned high hopes on, the pound fell against the US dollar immediately, falling to 1.0327 US dollars per pound, which is a 37-year historical low. Some American media pointed out that since Terrass took office, the total loss of the British stock and bond market has exceeded $500 billion.
Never before in Britain's two-hundred-year history has the pound been trading at 1:1 against the dollar, but it has approached the 1:1 mark after a policy to boost the British economy. I have to say that there is indeed great irony. The policy has rightly been criticized by many parties in the UK, and the British economic think tank Fiscal Institute said that the new strategy of the Tlas government depends on investors willing to lend more to the UK, but the market's reaction is worrying. British economist Pew said directly that there is nothing in the tax cuts of the Tlas government that can make people optimistic about the long-term prospects of the economy.
Many believe that Truss introduced the tax cut policy to imitate her idol Margaret Thatcher. But today is different, not to mention that the tax cuts proposed by Margaret Thatcher in the past have boosted the British economy while also causing the consequences of soaring inflation, causing the then Bank of England to have to raise interest rates sharply. Now, after the introduction of the tax cut policy of the Tlas government, the consequences of the decline in the pound exchange rate are more serious than that, and even the International Monetary Fund has publicly criticized it. An IMF spokesman said it was important to ensure that fiscal policy did not contradict monetary policy in view of rising inflationary pressures in many countries, and that it was not recommended to implement large-scale and untargeted fiscal plans at this juncture.
The tax cut policy introduced with full confidence not only did not achieve the desired effect, but also attracted criticism from many parties, saying that Tlas was burned by the fire. The most critical thing is that the British economy is already in decline, after financial institutions predicted that the British economy will fall into recession by the end of 2022, and inflation will soar to 14%. Terras's operation will most likely bring the time of the British recession earlier.
Although Tlas once called himself the "Iron Lady", he was not Thatcher after all, lacked the corresponding skills and capabilities, and the excessive economic stimulus policy was more like a "big gamble". In a period of economic stability in the United Kingdom, Tlas may be able to gamble and win, but now that the British economy is on the verge of danger, too aggressive policies are likely to have a good outcome.