Wednesday (September 28th): Kwarteng under Fire 

Name? Kwasi Kwarteng 

Westphalian identity? British 

Age? 47

Why is he in the news? The new Chancellor of the Exchequer has had a rough start as a new wave of economic crises hit the UK this week. The pound’s strength fell dramatically following Kwarteng’s mini-budget that announced £45bn of unfunded tax cuts. The announcement was enough to earn the criticism of the IMF, who urged the chancellor to reconsider the budget, claiming it undermined efforts to tackle inflation and fueled inequality. 

Why do we care? In an unusual twist of fate, the government has been bailed out by a bank. The Bank of England took action today to prevent a ‘material risk, i.e. the collapsing of UK pension funds. The bank decided to buy as many government bonds as possible to help stabilise out of control financial markets, with many now deeming Kwarteng as unfit for his new job. 

Why should you care? Continued economic crisis in the first month of the new UK government is casting doubt on the new prime minister’s leadership. For now, Truss is standing firm on her decision to appoint Kwarteng, but deep criticism from both the opposition and within her own party spells danger for Kwarteng’s job security. You should care 3/10 about endless instability in the British government. 

Who else cares? U.S. President Biden, who has already been critical of Truss’ government regarding its handling of the Northern Ireland Protocol. The US president took to Twitter, claiming he was ‘sick and tired’ of trickle-down economics, the main principle of Kwarteng’s economic theory (though No.10 was quick to deny it was anything to do with the UK).

Any further comments? Kwarteng is part of the new government following Boris Johnson’s vote of no confidence. By announcing tax cuts for the wealthy and removing limits on bonuses for bankers, he is doing little to inspire confidence in the IMF, the Whitehouse, and least of all, the British public. 

Ross Hardy

R&A Alumno