The UK government has introduced huge tax cuts for the super-wealthy, paved the way for struggling families to fall deeper into poverty.
On top of government measures that have been described as “immoral”, the new owners of Downing Street are overseeing the worst drop of the British pound in decades.
And if that wasn’t bad enough, the Bank of England has issued a warning saying it "will not hesitate to change interest rates as necessary" after markets reacted badly to the government's tax-cutting mini-budget.
A few days ago, all eyes were on chancellor Kwasi Kwarteng’s budget. The new measures were announced in the middle of deep economic pain for the ever-expanding poor classes of society. This includes households that are struggling to make the difficult choice of either putting food on the table or heating their homes.
The government will use more than £70 billion of increased borrowing to introduce the biggest tax cuts in 50 years. But will the tax cuts serve those living in poverty amid rising inflation or will they slash taxes for the rich who can afford to pay more at a time of economic turmoil.
After some time analyzing the extensive new plans, it has become clear that this government package is an absolute disaster for the poor and vulnerable. And as for the super-wealthy, they will no doubt be laughing all the way to the bank following the government’s new budget.
According to the analysis of one prominent think tank, “only the very richest households” will benefit from the controversial tax cuts, the main theme announced in the package by Prime Minister Liz Truss’s government.
The Resolution Foundation said it had found the chancellor’s package will do nothing to stop more than two million people falling below the poverty line amid a cost of living crisis.
This comes as the Labour opposition party accuses Truss and Kwarteng of gambling with people’s finances in “casino economics” and said their “trickle-down” approach will leave the next generation worse off.
Using more than £70 billion of increased borrowing, Kwarteng unveiled the biggest program of tax cuts for 50 years, including an end to the top rate of income tax for the highest earners.
In a scathing assessment, Resolution Foundation said “only the very richest households in Britain” will see their incomes grow as a result of the tax cuts. Next year, the wealthiest 5% will see their incomes increase by 2%, while a massive 95% of the population will get poorer amid unprecedented inflation.
An economic research group, the Institute of Fiscal Studies, also said while those with comfortable incomes of over £155,000 will benefit from the government’s new tax policies, the “vast majority of income tax payers paying more tax”.
In other words, the combined package of measures announced in the mini-budget means someone who currently makes £1m will make a profit of £55,220 a year, while someone earning £20,000 will make just £157.
Many economic experts have hit out at the government, saying it is taking a very big financial gamble with the future of the country’s finances, something that has been reflected by the markets and the country’s economy.
In signs of the UK's waning economic power, experts have forecasted, the government measures will involve an extra £411 billion of borrowing over the next five years.
It’s perhaps no surprise that in the days after the tax cuts plans, the value of the pound tumbled to a record low against the dollar, at times falling to an all-time low of $1.03 amid market fears the drop will continue.
Some experts are forecasting the pound to fall below parity with the U.S. dollar this year.
The pound-nosediving has triggered alarm at the Bank of England, which only a few days ago raised interest rates, hurting millions of households. The central bank has issued a rare statement saying it was "monitoring developments in financial markets very closely in light of the significant repricing of financial assets".
That has triggered market speculation that the regulator may be forced to intervene and hike interest rates again in the next few days, despite having just doing so a few days ago. Such a move by the central bank will bring further despair to millions of struggling households already angry at the previous interest hike.
The budget was announced a day after the Bank of England warned the UK may already be in a recession and lifted interest rates to 2.25%.
The Conservative party tax cuts have even sparked surprise criticism from popular former English footballer, Gary Neville, who says the government’s tax cuts for the rich at a time of record inflation are “immoral” and “madness”.
The football legend savaged the plans to hand billions to the wealthiest saying a change in government “cannot come quick enough”. He accused Truss of “taking the absolute mickey out of us” by helping the well-off as ordinary families find it difficult to make ends meet.
“People are struggling to pay their energy bills. I don't know any person on more than £150,000 a year that will think it's the right thing to do to basically give us more money,” Neville said.
“They want better public services, better health, education, doctor waiting times to come down. It's immoral to think at this moment in time, tax cuts should be given to the wealthy when people are so nervous and desperate,” he said.
“The reason I'm there is to highlight with my voice that it’s just wrong. They have depressed our ambitions to such a low. I think we will wake up and look back in years to come at this era [of Tory government] and think what the hell were we doing sitting back and not speaking up. And that’s why I’m speaking up at this moment.”
Neville went on to say, “They are so cruel this government that even wealthy people are bemused. We know this is not a time for us to be able to get more money.”
As the rich get richer and the poor get poorer, the government has waged war on unions in an attempt to make it ineffective for workers to stage strike action in protest at the rising cost of living.
Kwarteng declared: “We will legislate to require unions to put pay offers to a member vote to ensure strikes can only be called once negotiations have genuinely broken down.”
He also revealed moves to ensure minimum service levels during transport strikes, obliging unions to ensure trains run and to legislate to require unions to put any pay offers from employers to a vote.
Among the many furious union leaders Mick Lynch, the general secretary of the RMT union, said: “We already have the most severe anti-democratic trade union laws in Western Europe and this latest threat will rightly enrage our members.”
Public anger against the government has been reflected by the latest YouGov survey that shows damning results for the prime minister.
When members of the public were asked what confidence they had in Truss to handle the rising cost of living, 72% said they had not much or no confidence.