It will be austerity 2.0 and the predictions are of a deeper recession because of tax increases and spending cuts (both already announced in general terms by Hunt, ally of Sunak and tipped to remain Chancellor).
Increasing the corporation tax is his policy, for instance.
A lot of the government's debt level issues also stem from the response to Covid when, hmm, Sunak was in charge of public finances...
If he is an MMT-er then we might dodge austerity but i can't see him standing up to the bond markets after what the UK has just been through so that will hold him back. Also if he is an MMT-er there's the need for higher taxation and no-one has figured out how that side of MMT should work fairly yet i don't think?
AIUI the contentious point of MMT is on crowding out private investment.
EDIT: for clarity
Central bank monetary policy did not lead to the current inflation, just like it did not lead to inflation in the post-GFC era. Unlike what some folks predicted back then:
> We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.
* https://economics21.org/html/open-letter-ben-bernanke-287.ht...
At least per the SF Fed's research, about half of the current situation in the US is/was supply-side issues, and about a third is the demand side of things:
* https://www.frbsf.org/economic-research/publications/economi...
The demand side was mostly driven by fiscal stimulus.
The commodities chaos caused by recent geopolitical events kind of threw a wrench into most predictions.
They are specifically not austerity 2.0, that is why they are raising taxes (Osborne reduced taxes significantly whilst cutting spending). All the measures to raise taxes were in order to sustain spending levels because there is no way to cut the large spending areas in the short-term. His approach has been to do that in the most fair way possible (the increase in corporation tax is combined with the introduction of a new small company rate which stays the same).
...and what was the alternative to furlough once the govt announced lockdowns?
Hunt already said that there will be huge spending cuts.
What we're waiting for are the details of where these will fall, not if they will happen.
The increase of the corporation will hurt the economy further and remove a competitive advantage (new rate will be same as Germany's...). Again, this is not my opinion but what the reports from economists and analysists say.
This is a classic austerity approach to reduce debt. The conflict within the party is between that and reducing debt relatively to GDP (but perhaps not in absolute terms) by going for growth (making the cake bigger) but as we've seen that latter strategy is problematic because the markets do not really want to here about even further debt.
The rise in corporation tax for MNCs won't hurt competitiveness. The US had a 35% rate with no issues. We can raise ours to 25% with no issues. The only reason we reduced our rate to the level we did was because of tax havens in the EU, we have a global corporate tax deal which the EU will comply with (saying vaguely that you are right because "economists and analysists" say so is weak).
The issue with "going for growth" was that it wouldn't have boosted growth. The spending cuts were only required because of the tax cuts, the tax cuts aren't happening. When he was Chancellor, Sunak was cutting spending and this will likely continue (it has to, spending is far too high, the NHS became massively bloated during Covid). Reduction of debt will be gradual, the strategy is not austerity (as has been repeated ad nauseum, this happened after 2018 as well...some people just never stopped saying austerity was happening even when spending was rising significantly).
Yeah, experts, what do they know!
> Sunak was cutting spending and this will likely continue
So, austerity 2.0, then.
First time I hear spending of the NHS has to be cut because they are 'bloated'... usually people complain about lack of resources.
Have a good one.
No, any kind of spending cut doesn't not equal austerity 2.0. Labour would also be cutting spending, so that is austerity 2.0?
NHS spending is close to Germany levels, which is regarded as ludicrously inefficient, even for a private system, because of the emphasis on choice. I suspect that the difference between me and "people" is actually being aware of what NHS spending is.