The new Conservative Party government on Friday canceled a rise in the corporate tax rate, slashed the basic income tax rate to 19%, and launched discussions about special economic zones in multiple regions. “Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services,” British Chancellor of the Exchequer Kwasi Kwarteng remarked in a press release. “This will not happen overnight but the tax cuts and reforms I’ve announced today — the biggest package in generations — send a clear signal that growth is our priority.”
Meanwhile, as other European countries impose energy consumption restrictions upon their citizens while continuing to prioritize renewable power commitments, Truss has pushed for higher oil production and set the goal of becoming a net exporter of energy by 2040.
“We are cutting off the toxic power and pipelines from authoritarian regimes and strengthening our energy resilience,” Truss said on Wednesday during a speech to the United Nations General Assembly. “We will ensure we cannot be coerced or harmed by the reckless actions of rogue actors abroad. We will transition to a future based on renewable and nuclear energy while ensuring that the gas used during that transition is from reliable sources including our own North Sea production.”
The British government announced a new round of oil and gas leases for the North Sea and lifted its moratorium on shale gas production, which disallowed the practice of fracking. The ban was originally established three years ago amid concerns over earthquakes.
Truss, who aims to double the growth rate of the British economy, drew comparisons to her predecessor, former British Prime Minister Margaret Thatcher, as well as former U.S. President Ronald Reagan.
A piece in The Wall Street Journal remarked that Truss is attempting to shape her political image in the mold of Thatcher, whose policies spurred an era of economic growth. The Iron Lady, however, enacted spending cuts before tax cuts to ensure that the government remained funded — meaning that the Truss agenda is more in line with that of the Gipper, who increased spending even while he decreased taxes.
Indeed, as energy prices continue to rise across Europe, Truss introduced a proposal to limit the annual cost of power for a typical household to £2,500 for the next two years. The British government had already greenlit the Energy Bills Support Scheme, which will remove £400 from citizens’ power bills each month over the upcoming winter. “We are supporting this country through this winter and next, and tackling the root cause of high prices, so we are never in this position again,” Truss said during an energy policy debate in the House of Commons.
Nevertheless, not all comparisons between the Truss agenda and Reaganomics are positive. An article in The Economist predicted that a variety of economic woes, from unfavorable exchange rates to lackluster labor market conditions, will dampen Truss’ ability to resurrect the economic atmosphere of four decades ago.
“It is admirable to try to boost long-term growth by pruning regulations and taxes. But the high growth of the Reagan era was partly the result of women entering the workforce,” the article said. “Britain is ageing and its economy is still adjusting to Brexit. These factors are hurting the supply side of the economy by more than reforms are likely to help.”