The Economist Latin America October 22, 2022

Jeremy Hunt, Britain’s new chancellor of the exchequer, ditched almost all of the unfunded tax cuts in the government’s mini-budget; the cuts had helped cause mayhem in the markets when they were announced on September 23rd. Mr Hunt was appointed to the job after Kwasi Kwarteng was unceremoniously sacked as chancellor by Liz Truss, the prime minister. Mr Hunt, a former foreign secretary, has put the Treasury firmly back in control of policy, a humiliation for Ms Truss, who had promised to rip up “abacus economics”. Amid chaotic scenes in Parliament, speculation swirled about how long Ms Truss could last. Adding to the tumult Suella Braverman resigned from her job as home secretary after just 43 days. In a parting shot, Ms Braverman, who is on the Tory right, laid into…

Markets reacted positively to the British government’s decision to scrap most of its unfunded tax cuts. The yield on 30-year gilts fell back to around 4.2%, still higher than it was just before the mini-budget spooked investors in late September. The pound traded around $1.12, not far off its lows in recent days. Jeremy Hunt, the new chancellor, is reportedly mulling windfall taxes on banks and energy companies to help plug a fiscal gap still worth tens of billions of pounds. Big cuts to public spending are also in the offing. The Bank of England said it would start selling the bonds it has accumulated through its quantitative-easing programmes on November 1st, but only short and medium-dated gilts and not bonds with a maturity of more than 20 years, which saw…

Jeremy Hunt, Britain’s new chancellor of the exchequer, ditched almost all of the unfunded tax cuts in the government’s mini-budget; the cuts had helped cause mayhem in the markets when they were announced on September 23rd. Mr Hunt was appointed to the job after Kwasi Kwarteng was unceremoniously sacked as chancellor by Liz Truss, the prime minister. Mr Hunt, a former foreign secretary, has put the Treasury firmly back in control of policy, a humiliation for Ms Truss, who had promised to rip up “abacus economics”. Amid chaotic scenes in Parliament, speculation swirled about how long Ms Truss could last. Adding to the tumult Suella Braverman resigned from her job as home secretary after just 43 days. In a parting shot, Ms Braverman, who is on the Tory right, laid…

OVER THE past decade owning a house has meant easy money. Prices rose reliably for years and then went bizarrely ballistic in the pandemic. Yet today if your wealth is tied up in bricks and mortar it is time to get nervous. House prices are now falling in nine rich economies (see Finance and economics section). The drops in America are small so far, but in the wildest markets they are already dramatic. In condo-crazed Canada homes cost 9% less than they did in February. As inflation and recession stalk the world a deepening correction is likely—even estate agents are gloomy. Although this will not detonate global banks as in 2007-09, it will intensify the downturn, leave a cohort of people with wrecked finances and start a political storm. The cause…

IN 2012 LIZ TRUSS and Kwasi Kwarteng, two of the authors of a pamphlet called “Britannia Unchained”, used Italy as a warning. Bloated public services, low growth, poor productivity: the problems of Italy and other southern European countries were also present in Britain. Ten years later, in their botched attempt to forge a different path, Ms Truss and Mr Kwarteng have helped make the comparison inescapable. Britain is still blighted by disappointing growth and regional inequality. But it is also hobbled by chronic political instability and under the thumb of the bond markets (see Britain section). Welcome to Britaly. The comparison between the two countries is inexact. Between 2009 and 2019 Britain’s productivity growth rate was the second-slowest in the G7, but Italy’s was far worse. Britain is younger and has…

Markets reacted positively to the British government’s decision to scrap most of its unfunded tax cuts. The yield on 30-year gilts fell back to around 4.2%, still higher than it was just before the mini-budget spooked investors in late September. The pound traded around $1.12, not far off its lows in recent days. Jeremy Hunt, the new chancellor, is reportedly mulling windfall taxes on banks and energy companies to help plug a fiscal gap still worth tens of billions of pounds. Big cuts to public spending are also in the offing. The Bank of England said it would start selling the bonds it has accumulated through its quantitative-easing programmes on November 1st, but only short and medium-dated gilts and not bonds with a maturity of more than 20 years, which…