The UK government’s sweeping economic strategy is a “cautionary tale”, a senior official in Joe Biden’s cabinet has said in scathing remarks about Prime Minister Liz Truss’ plan.
US Commerce Secretary Gina Raimondo has called tax cuts and deregulation a “failed economic theory” that would lead to lower growth and greater inequality.
Ms Raimondo said it was ‘difficult to see’ how Ms Truss’ new government was taking inflation seriously and insisted the US was talking about a rather different approach.
Asked if she would consider the unrest in Britain a cautionary tale, the US trade chief replied: “Yes…these policies are brand new. From where I’m sitting, I don’t know how this story will end. I would just say that we are pursuing a different strategy.
Speaking at an event hosted by The Hamilton Project in Brookings, Ms Raimondo said: ‘You say, ‘Is this a cautionary tale? I mean, the markets fell. The pound fell. It is still early for this new strategy, but it is not the one we are pursuing.
It follows Mr Biden’s attack on ‘fallout economics’ shortly before meeting Ms Truss in New York last week. Number 10 had claimed it was ‘ridiculous’ to suggest the US President’s remarks were aimed at the Prime Minister.
On Mr Biden’s economic strategy, Ms Raimondo added: “The President, every time you talk to him, he talks about: you have to pay for what you spend and he believes in it.”
She said the US government was “taking inflation seriously, letting the Fed do its thing, watching deficit spending, cutting deficits.”
This follows critical remarks by White House economic adviser Brian Deese, who said on Wednesday he was not surprised by the negative reaction in financial markets to the UK’s tax cuts and borrowing plans. United.
Biden’s top adviser – director of the White House National Economic Council – said he stressed the need to maintain “fiscal prudence, fiscal discipline”.
Former US Treasury Secretary Larry Summers was scathing about the “totally irresponsible” policies pursued by Ms Truss and her Chancellor Kwasi Kwarteng.
The senior official – who has advised Presidents Bill Clinton and Barack Obama – said markets were treating Britain as a developing nation where “credibility” is lost.
On Thursday morning, Ms Truss insisted her government’s borrowing-fueled tax cuts remained the ‘right plan’ – and claimed it was ‘simply wrong’ that it was of a “reverse Robin Hood” plan that benefited the wealthy.
The Prime Minister also suggested that Russia was responsible for the current economic turmoil in the UK, telling BBC Radio Bristol that Britain was facing “a very, very difficult global economic situation due to the war that Vladimir Putin perpetrated in Ukraine”.
Labor and the Liberal Democrats have called for parliament to be recalled, while some Tory MPs have suggested Ms Truss should sack Mr Kwarteng.
A former minister said The Independent that Mr Kwarteng could yet be forced into a humiliating rollback on his 45p income tax rate cut for high earners.
Former Bank of England Governor Mark Carney said the Truss government had “undermined” the UK’s economic institutions with the borrowing-fueled tax-cutting spree, saying the measures ” were working at cross purposes” with the Bank.
Even Gerard Lyons – the right-wing economic adviser to Ms Truss’s campaign who influenced ‘Trussonomics’ – criticized Mr Kwarteng for failing to prepare markets for his mini-fiscal fiscal measures.
“Before the mini-budget, there was a need for the Chancellor to keep the financial markets on his side – and I warned of the need for him to do so,” he told the BBC. Newsnight. “One key group he failed to keep to his side was the financial markets.”
The Independent Gt