European capitals believe new government’s tax-cutting, high-borrowing plan exposes flawed thinking that drove Brexit
The tut-tutting from EU policymakers can almost be heard from across the English Channel.
Current and former officials in continental Europe are barely even trying to conceal their Schadenfreude over the market turmoil that has greeted the UK government’s plan to fund £45bn of tax cuts mostly for high-earners by increasing debt.
The French, German and Spanish finance ministers have all criticised the fiscal package presented on Friday by UK chancellor Kwasi Kwarteng, which has also met with opprobrium from the IMF, the US Treasury and the Federal Reserve.
In mainland European capitals, there is a further gut feeling that as well as being a poorly timed and risky idea, which sent the pound tumbling and forced the Bank of England to intervene to halt historic falls in gilt prices, the crisis caused by the UK tax-cutting plan has exposed what is widely seen as flawed thinking behind Brexit.
UK prime minister Liz Truss and her chancellor Kwasi Kwarteng
UK prime minister Liz Truss and her chancellor Kwasi Kwarteng. “Since Brexit, the UK has shown a lot of hubris and denying reality, as if it was going back to greatness and the days of the empire,” said Vítor Constâncio, a former vice-president of the European Central Bank. “It’s delusional and underlines the cautionary tale that Brexit has represented, which is that going away from the European centre has been bad for the UK.
“The pound is no longer an internationally meaningful currency — it’s amazing.”
Constâncio, now an economics professor at the University of Navarra in Madrid, continued: “There is Schadenfreude, yes — not pleasure, that would be too strong. But yes, the sense of ‘I told you so’ is widespread in Europe now.”...
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