Daily Mail, which trashed Sunak for weeks, backs the latest Thatcherite PM

No To Sunak’s Austerity Plan!

Labour should reject calls for benefit cuts and spending squeeze

Paul Mason
5 min readOct 25, 2022

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As PM Rishi Sunak movest towards a big austerity budget I am seeing a lot of media pressure on Labour to roll with it, in the interests of “steadying the markets and displaying fiscal discipline”.

Here’s why Labour should reject austerity.

For certain Labour can play a role — both now, during the coming election and in its first period in office — in restoring UK fiscal credibility. And its budget proposals must demonstrate fiscal discipline — ie avoiding the kind of uncosted moves that brought Truss to disaster.

But the gilt-yield spike that brought down Truss occurred because:

  • Lenders feared she wasn’t serous in fighting double-digit inflation;
  • She broke with the neoliberal institutions that guarantee central bank dominance over policymaking (OBR/HMT/BoE);
  • The fundamentals of the UK economy are weak because there is no clear investment story post-Brexit. Investment has flatlined, trade is falling, wages are falling; sterling is weak;
  • Truss/Kwarteng demonstrated no grasp of this reality;
  • All G7 yields are rising (except Japan) because of high inflation and the strengthening dollar, and Britain looked like the weakest link.

The first thing Labour politicians need to do is demonstrate they understand this story and keep telling it. It was Truss/Kwarteng’s detachment from reality (the ‘stupidity risk premium’) that exacerbated the problem.

The next thing is to understand that the ‘£40bn black hole’ in the public finances only exists because of strict budget rules — the Charter for Budget Responsibility — introduced by Sunak in January 2022.

It requires debt to be falling as a % of GDP in the third year of the forecast; therefore the books have to be balanced over the same time period; it mandates a 3%/GDP cap on investment and an absolute cap on welfare spending.

This was a kind of ideological hair shirt Sunak imposed on himself in exchange for the massive practical splurge in public spending and borrowing due to Covid. It’s not just Thatcherite in its fiscal intent…

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Paul Mason

Journalist, writer and film-maker. Author of How To Stop Fascism.