While the prime minister seemed lost for words as she faced her first round of interviews following the economic fallout of the mini budget, international reaction to the turmoil has been much less coy.
We take a look at how Europe has reacted to the economic chaos triggered by the government’s £45bn tax cutting gamble.
In France, Le Monde ran with a headline reading: “The United Kingdom sinks once again into political crisis.’
Recognising the chancellor’s economic plan for what it is, tax cuts for the rich, the French daily said:
“With their “mini-budget” – in fact, a huge tax stimulus for the sole benefit of the most wealthy – British Prime Minister Liz Truss and the Chancellor of the Exchequer Kwasi Kwarteng have created not only a financial storm, but also a new and deep political crisis. And this just three weeks after taking office, as the Conservative Party is still recovering from the Partygate scandal and the humiliating departure of its previous leader Boris Johnson.”
The newspaper also picked up on the buoyant mood felt within the Labour Party at this year’s conference.
“In the United Kingdom, a wind of optimism is sweeping through the Labour Party.
“At its annual conference, the Loyal Opposition was feeling buoyant about the early difficulties of Liz Truss’s Conservative government, and claiming the mantle of ‘fiscal responsibility,” wrote the French daily.
A ‘major experiment’ and ‘reckless gamble’
Similar reaction came from Germany. Writing in the German daily the Frankfurter Allgemeine Zeitung, Philip Plickert, a London-based economic correspondent, said Kwarteng should “consult the history books once again to see how dangerous an escalating twin deficit can be. Prime Minister Truss cannot afford a balance of payments crisis.”
Christian Lindner, Germany’s finance minister, said the UK had embarked on a “major experiment.”
Meanwhile Süddeutsche Zeitung, Germany’s largest broadsheet newspaper, referred to the policy as a ‘reckless gamble.’
“Such unrest is more familiar in the emerging markets, but not in a highly developed economy like the British one. Following the end of the government of Boris Johnson an economic change of direction was expected, but one so radical? Liz Truss has said goodbye with one fell swoop to one of the keystones of conservative policy: she does not give a damn about solid state finances.”
In Spain, El Mundo, the country’s second largest printed daily, reported on Truss’s Conservative Party “sinking” 33 points behind Labour. The report refers to largest difference recorded between the two parties in decades, double what existed at the beginning of the week, as reflecting “popular outcry against the so-called “rich-man’s budget.”
‘British blowout’
A ‘British blowout’ said commentators in Ireland. The Irish Independent said the Irish government, which unveiled its own budget this week, should learn lessons from the UK’s fiscal mess.
“Ministers Paschal Donohoe and Michael McGrath have been delivered a real-time exhibition in exactly how not to do it. Despite the considerable weight of expectations, Budget 2023 must be grounded,” said an editorial in the newspaper.
With a large budget surplus – unlike the UK which is borrowing to fund tax cuts – the Irish finance minister unveiled one of the biggest giveaway budgets in the country’s history this week. Paschal Donohoe announced an income tax package to the value of more than €1.1bn (£963m). Most of the funding comes from a huge increased tax-take from corporations, particularly American tech companies.
The budget is focused on helping families and businesses facing the cost-of-living crisis arising from the aftermath of the Covid-19 pandemic and the Russian invasion of Ukraine, said Donohoe.
In Greece, where the crisis-stricken pound has evoked memories of their own financial emergency in 2010, where high levels of borrowing put the economy on the brink of collapse, government insiders told the Guardian that the imposed tax cuts were “nonsensical.”
“They make no sense either politically or economically,” said one government insider, adding:
“Clearly Labour is on course for a landslide.”
Gabrielle Pickard-Whitehead is a contributing editor to Left Foot Forward
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