If a week is a long time in politics, four months must be the equivalent of a year-long case of vape withdrawal. At least that is what it must feel like for the Chancellor.
I cannot help but feel slightly bad for Chancellor Jeremy Hunt. After failing to win the party leadership twice for being too sober, too sensible, and too centrist, it was those very qualities that propelled him to the second most powerful position in Cabinet. Since his return to frontbench politics, he has been forced to witness what can only be described as a series of unfortunate events.
The main issue for him, however, is his party’s keenness to simultaneously lower taxes and raise spending, all whilst lowering inflation and generating stable economic growth. If it sounds contradictory, that’s because it is.
Instead, Jeremy Hunt’s strategy is focused on persuading businesses that a post-Brexit Britain is a financially viable investment. In a speech on Friday January 27, Hunt spoke of a desire to turn Britain into ‘the next Silicon Valley’. Exciting.
Strangely, the speech was absent of policy proposals. Instead, we have been blessed with “four E’s”: Enterprise, Education, Employment, and Everywhere. Whilst I may cringe at the use of the word “Everywhere”, it is important to notice that these buzzwords comfortably fit into a broader narrative of a pro-business economy caused by Brexit. Hunt points to the “regulatory flexibility” that the UK is now afforded post-Brexit as indisputable proof that leaving the European Union has untethered the previously restricted British economy, allowing it to travel unchartered lengths to a position of growth and stability.
Is this deliberate vagueness a sign of cuts to business rates in the spring budget?
Probably not. The irony of a combination of national insurance hikes for individuals with a tax paradise for foreign businesses will not be completely lost on the voters. As a result, whilst Hunt normatively desires tax cuts, the fear of losing office in 2025 will prevent him from proposing anything too radical.
The real purpose of the speech was to reassure businesses and backbench MPs of the government’s commitment to growth, stemming from an increasingly pro-business and politically savvy Labour Party.
The success experienced by Keir Starmer and Rachel Reeves, the Shadow Chancellor, at the World Economic Forum in Davos acts as proof. Meanwhile, Business Secretary Grant Shapp’s frosty reception points to a global stage that struggles to trust the Conservative party to carry the burden of fiscal responsibility.
What’s more, the recent stories of sleaze and scandal suggest a fragmented party struggling to define itself. With the recent scandals surrounding Nadhim Zahawi and Dominic Raab converging with the restless backbenchers keen to defy the government, Rishi Sunak and Jeremy Hunt safely stand as the underdogs in the build-up to the next general election.
This takes us back to the government’s economic policy. In trying to convince businesses that Britain is poised for economic growth, Hunt is clearly attempting to return the Conservative party back to the role of a pro-business party. In doing so, he can reclaim the support of the dogmatic free marketeers opposing his chancellorship and powerful businesses running to the Labour party. This is all tied together by Brexit, which has supposedly unleashed secret powers to foster prosperity.
Here’s the snag: nobody believes anything they say, including his government. The government’s own forecasters (the OBR) predict a weak rebound of the British economy. Adding fuel to the roaring fire, the IMF recently revised their projections to predict an economic contraction in 2023, whilst predicting growth across the world, including Russia. In light of this, investors are unlikely to see Britain as a financially viable investment.
It may seem tough to blame this on Hunt and the Prime Minister, who are largely dealing with problems inherited from previous governments. Nevertheless, their economic plans do not spell for success in 2025, even if their actions are in my opinion, not completely devoid of merit.
In light of the above, Hunt’s vision to turn Britain into a growth machine is only possible in the long-term. As tempting as they may be, the precarious position of the Conservative party makes this vision unlikely to materialise.
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