As Britain suffers a cost-of-living problem, irate Britons have rapidly joined in on the Chancellor’s “Emergency Budget” plans by circulating images of infamous fat cats and “magic money trees.”
In his so-called mini-budget on Friday, Chancellor Kwasi Kwarteng outlined a number of initiatives, including eliminating the top income tax rate for the wealthiest individuals, eliminating the ceiling on bankers’ bonuses, and tightening welfare regulations.
However, his statement has drawn criticism due to worries that it would bring back a “culture of greed” in the City at a time when the cost of living issue facing Britons is becoming worse.
People started circulating memes depicting bankers and wealthy people celebrating the decision right once, one of which included Gordon Gekko, the fictional villain of the well-known Oliver Stone film “Wall Street,” who has come to represent avarice in popular culture.
Theresa May, the former prime minister, reportedly said in 2017 that “there isn’t a magic money tree” to a nurse who had not had a salary raise in eight years, according to a mocking meme that included an image of a tree and the statement, “So there is a magic money tree after all.”
What a time to be either a millionaire or billionaire in the UK, said another user beside a picture of a luxurious vacation. I’m eagerly awaiting the trickle-down effect to affect my financial account.
One person uploaded a meme of three dressed-up guys dancing while tweeting, “Bankers in the city right now.”
Still waiting for banker’s bonuses to trickle down, read the caption on another meme that featured a skeleton sitting on a seat.
The European Union imposed a limitation on bankers’ yearly pay-outs of 100% of their salaries, or double with shareholder permission, after the 2008 financial crisis. Mr. Kwarteng’s contentious decision would abolish this cap.
Beginning in April, the 629,000 earners who make above £150,000 annually will pay the higher income tax rate of 40% instead of the current top rate of 45%.
He argued that the decision will inspire major banks to invest, create employment, and pay taxes in the City.
Paying out bonuses harmonises individual incentives with bank motivations, promoting UK economic growth, the Government noted.
When he announced the Treasury’s “mini-budget,” the Chancellor informed the House of Commons that “all the bonus cap accomplished was to push up the base salaries of bankers or drive activity outside of Europe.”
Mr. Kwarteng announced a number of significant financial changes on Friday, including the early April 2019 implementation of the basic income tax rate reduction to 19p in the pound and the reduction of stamp duty for purchasers.
As he reaffirmed intentions to eliminate the ceiling on bankers’ bonuses and tighten welfare regulations, he said that tax cuts are “essential to solving the puzzle of growth”
However, his proposals have drawn flak.
The First Minister of Scotland said that the very rich are “laughing all the way to the real bank.”
According to shadow chancellor Rachel Reeves, Liz Truss and Kwasi Kwarteng are two “desperate gamblers chasing a losing run” with an economic strategy that rewards the “already affluent.”
The Labour frontbencher attacked the Prime Minister and the Chancellor, warning that the government had given up a “menu without pricing,” and speculating as to what Mr. Kwarteng could have “had to hide” by refusing to provide quick independent predictions of his plans.
She said that Mr. Kwarteng’s Commons speech had served as a “total deconstruction” of the Conservatives’ performance during their 12-year rule.
“We have had six so-called plans for growth from the Conservatives since 2010,” Ms. Reeves said the lawmakers, “and here they are, a litany of failure with every single one of them.”
The Prime Minister and the Chancellor are like two frantic gamblers in a casino trying to break a losing streak, she added, adding that the Government lacks a realistic strategy to produce growth.
As much as they’d want us to believe otherwise, the case put out by the Chancellor isn’t a groundbreaking concept or a paradigm-shifting thought, as the minister said.
“What this proposal amounts to is keeping company tax at its current level and bringing back national insurance payments to their March levels.” Some fresh scheme.
“It’s all based on an outmoded mentality that holds that rewarding the already rich would help society as a whole,” she said.
They have opted to use trickle-down economics instead of levelling up.
‘As (US) president Biden said this week, he is sick and tired of trickle-down economics. And he has a point. It is unreliable, insufficient, and it won’t spur the necessary wave of investment.
The mini-budget, according to the Royal College of Nursing, “gave billions to financiers and nothing to nurses.”
Pat Cullen, general secretary and CEO, said it was an obvious indication that the government had “the wrong priorities.”
Nursing will be appalled by the choice to give wealthy bankers preference over NHS and social care workers, some of whom depend on food pantries and live on the verge of poverty.
“Ministers have exploited nursing staff’s goodwill for far too long, and we’re pushing our members to vote in favour of strike action when our ballot opens on October 6,” the statement reads.
Michael Barnett, a lawyer at Quillon Law who oversaw litigation involving prominent banking scandals after the 2008 crisis, cautioned that the choice runs the danger of re-introducing a culture of greed that existed before the financial catastrophe.
“News that limitations on bankers’ bonuses may be repealed would spark a reaction bordering on visceral,” he added, “to those who were wounded by the effects of the 2008 global financial crisis and the banking scandals that preceded it.”
The collapse of the financial services sector, which was fueled by a culture of greed and the chase of profit at any costs, was seen as being typified by “bankers’ bonuses.”
Whether successful or not, “bonuses and other financial incentives were a substantial component of many cases that were brought before the courts.”
Campaigners have emphasised how bankers’ pay-outs would skyrocket at a time when many families are experiencing increased living expenses and amid widespread strike action in an attempt to improve compensation.
“This mini-budget is shamelessly a budget for the affluent, big business, and the City – top incomes’ tax lowered, corporate tax slashed, investment bankers’ bonuses set loose,” said Unite national secretary Sharon Graham.
“We need to get inflation under control and establish a modern industrial base that provides excellent jobs at home and strengthens our national security,” said Gary Smith, general secretary of the GMB.
Instead, the Chancellor has opted to provide money to wealthy international corporations.
The Chancellor “is tight on wage increases for caregivers but gentle on bonuses for bankers.”
With Rebecca Evans MS claiming that the UK Government was “prioritising cash for tax cuts for the wealthiest” instead of assisting suffering people, the Welsh Government also criticised the proposals.
The UK Government is moving in a “very troubling path,” according to today’s pronouncements, Ms. Evans said. “Misplaced priorities have resulted in a regressive declaration that will entrench inequality across the United Kingdom.”
The Chancellor is prioritising financing for tax cuts for the wealthy, unrestricted bonuses for bankers, and preserving the profits of large energy firms rather than providing substantial, targeted assistance to those who need it the most.
In order to help prevent another crises of this kind, she said, “We might have seen an ambitious programme of investing in new green energy, fighting increasing bills, and enhancing our energy security in the long run.
We were promised a declaration that would guarantee the delivery of rapid relief, but this is far from what was required.
Others have noted that because of the abrupt Treasury move, banks would now need to deal with a variety of logistical issues.
‘Removing the bankers’ bonus cap will deliver greater flexibility for UK banks in how they structure the remuneration packages of their senior staff and the potential to reduce fixed costs, both of which arguably could drive competitive benefit to the UK,’ said Phillippa O’Connor, reward and employment leader at PwC UK.
However, before making any adjustments, businesses will need to carefully evaluate a number of policy, legal, and operational challenges that may result from this freedom.
The growth in fixed compensation, which has been ingrained in pay structures and policies over the previous eight years, will not be simple for businesses to disentangle.
According to Treasury papers, Chancellor Kwasi Kwarteng’s mini-budget would result in an increase in government borrowing of £72 billion.
The net financing demand for the Debt Management Office has increased from £161.7 billion in April to £234.1 billion.
Additional gilt sales totaling £62.4 billion and net Treasury bill sales totaling £10 billion will be used to pay for it.