Op-Ed: Liz Truss’ downfall won’t end trickle-down economics
At the heart of the UK’s biggest business scandal of the past two decades was the decision by Chancellor Philip Hammond to allow the government to borrow £6 billion more by offering taxpayers £4.5 billion in upfront concessions.
But the story, which broke on Monday, is only part of a much larger story, and one that is about much more than the taxpayer, or the borrowing of billions more.
It is about the way, under a Labour government, that the government has used its fiscal authority to try and save the economy by giving businesses a hand up, and the government some breathing space.
Liz Truss’s fall did not end the trickle-down economics experiment that she oversaw during her seven years as chancellor, nor the billions of pounds in concessions that the public has so far been offered. But it did end Truss’ career as a minister, and it does mark the end of trickle-down economics in government.
Since then, we now face the real danger of the “triple lock” in which the private sector’s growth, and economic activity, is protected by the government, and the government’s borrowing is protected by the private sector.
The Treasury’s offer to give a £2 billion interest-free loan to GMC will have no effect on the car giant’s borrowing. It will be, instead, used to protect the taxpayer from any additional borrowing by GMC, which is a company that is likely to struggle to raise the additional £2 billion in new borrowing.
The “breather” in government’s concession to the Treasury, however, does extend beyond GM.
This is the way, since 2010, the Treasury has been using its fiscal authority to provide a “breather” to the private sector by protecting it from the full impact of its failure to reach a post-Brexit deal with the EU, by protecting it from the impact of its failure to generate the economic output that is required to pay for its tax and spend policies.
This is a “breather” that the Treasury has been using in its concessionary debt deals with the car industry, to allow