Liz Truss will be deservedly damned if her government’s huge fiscal gamble fails

Below in the print edition) we reproduce a tweet by Lord Ashcroft (also embedded on this web page), the ex Tory party deputy chair and Treasurer.

Commenting on the mini budget unveiled by the chancellor Kwasi Kwarteng, under the new prime minister Liz Truss, he says that at last we “have a Conservative government”.

That is one, very debatable, way of looking at it.

Many Tories are delighted that Mr Kwarteng has cut income tax, cut corporation tax, cut stamp duty and cut national insurance. Those would typically be seen as right wing, pro business things to do. The problem is that they are not cutting expenditure too. Thus it is all uncosted.

It used to be that conservative politicians supported fiscal responsibility. They believed in low tax, so people and businesses could keep more of their money. The thinking was that they would spend it better than government. But Tories also believed in smaller government. Not now, under Ms Truss, who wants low taxes and a big state on basis that this will trigger growth. That means government money goes out faster than it comes in and debt rises It is alarming that financial markets have judged this a bad move, so the pound has collapsed towards parity with $US.

The UK policy could fuel inflation, which will wipe out the nest eggs of prudent, hard-working savers. It could also cause house prices, already too high, to rise more. Worse, it could cause a debt crisis.

This is a huge political and economic risk. Ms Truss will be deservedly damned if it fails.