When Trussonomics arrives, the big winner could well be Labour.

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<p><figcaption class=Photograph: Leon Neal/Getty Images

Since launching her bid to be prime minister in July, Liz Truss has been talking nonstop about the need to challenge Treasury orthodoxy and run the economy differently. Friday marks the day the conversation ends and Britain gets a taste of what Trussonomics really means.

Let’s be clear: Kwasi Kwarteng’s statement to MPs on Friday is much more than a run-of-the-mill fiscal event. The mini budget doesn’t do it justice either. Most comprehensive budgets matter little and are quickly forgotten. This is a big problem indeed.

For decades, economic policy in Britain has been dominated by the idea that the government’s books must balance. Margaret Thatcher compared her approach to public finances to that of a housewife seeking to manage a family budget. George Osborne accused the Gordon Brown government of “maxing out” on the nation’s credit card. Labor faced relentless questioning during the 2019 election campaign over how, in the absence of a magical money tree, it would fund its spending plans.

Trussonomics turns all this on its head. The government will borrow heavily, not only to finance energy support schemes for homes and businesses, but also for tax cuts. Far from dampening expectations since he became prime minister, Truss has doubled down. In addition to the cuts in social security contributions and the abolition of the rise in corporate tax for next April, he has talked about reducing the tax on Documented Legal Acts and advancing plans to reduce personal income tax.

Related: Kwasi Kwarteng refuses to allow OBR to publish forecasts with a mini budget

The message from Truss and Kwarteng to those wondering where the money is coming from to pay for extra spending and tax cuts is that it will all work out in the end because the boost provided to the economy by Trussonomics will lead to faster growth and higher economic growth. income for the treasury

It is all quite reminiscent of the moment, 91 years ago this week, when the new national coalition government abandoned attempts to keep Britain on the gold standard: a massive U-turn after years of high unemployment and austerity that was deemed necessary to defend the pound at all costs A minister in the previous Labor government said: “No one told us we could do that.” The same could be said for Friday’s budget.

Some of the arguments deployed by Truss and Kwarteng echo those made by mostly left-leaning economists during Osborne’s attempts to balance the budget after the global financial crisis of the late 2000s. that the Treasury was too obsessed with the deficit and needed to pay more attention to growth. His Keynesian critics warned Osborne that spending cuts and tax increases would slow down deficit reduction, as indeed it turned out to be the case. There is no doubt: the attacks on orthodoxy are fully justified because sticking to orthodoxy has not worked.

In reality, only a right-wing government could contemplate what Truss is doing. No Labor administration would dare to say that its economic plan is to boost growth by borrowing hundreds of billions of pounds, for fear of upsetting the financial markets. Just as only a right-wing Republican president, Richard Nixon, could risk making overtures to Beijing in the early 1970s, the attack on Treasury orthodoxy is easier for a self-described Thatcherite.

However, the intellectual and political climate has changed since Thatcher came to power during an earlier energy crisis in the late 1970s. Back then, a strong pound and high inflation made life excruciatingly difficult for British manufacturers, but Thatcher showed little interest in rescuing them. She let companies sink or float, with the strong surviving and the weak failing. Thatcher’s intention was to wean the country off the idea that the state should be expected to solve all problems.

That philosophy has not survived the double crises of the last two and a half years: first a pandemic and now skyrocketing energy bills. The government responded to the former with the license and a large amount of business support, and has now put forward the largest package of state support to the economy in peacetime to deal with the latter. Leaving homes and businesses to fend for themselves the best they could was never an option for Truss. The argument at Westminster is not whether there should be government intervention in the economy, but how big the intervention should be and how it should be financed.

All of which is good news for Labor and the progressive left in general. For starters, Trussonomics protects Keir Starmer from claims that his spending plans are reckless or unaffordable. Unlike what Kwarteng will announce on Friday, the Labor Party’s fiscal and spending plans are modest and conservative.

What’s more, by challenging orthodoxy, Truss has made room for other hitherto taboo ideas. If it’s possible to borrow to finance tax cuts, why not borrow to increase your welfare payment or for a green new deal?

There is one final, and obvious, way in which Trussonomics could be useful to Labour. Growth has stalled, inflation is close to 10%, the pound is at a 37-year low, the chancellor has sacked the top Treasury chief and has decided not to subject his “fiscal event” to the scrutiny of the independent Office for Budget Responsibility. . The Conservatives are behind in the polls, there is little time left before the next election and there is every chance things will go terribly wrong.

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