My Take on Econ

 Elizabeth Truss, the new PM and Kwasi Kwarteng, the new chancellor released a “mini budget” last Friday, and there’s a lot to talk about. ·          What was in the mini budget ·          What were/will be its effects ·          My opinions on the mini budget The mini budget has had a drastic, negative impact on the economy within a week of its release and within a month of the Truss government coming to power. So, what is it all about. Key points The mini budget has come with drastic tax cuts, the largest in the UK since 1972. In terms of income tax [1] . The basic tax rate (for earnings between £12,571 to £50,270) will be cut by 1%, from 20% to 19% in April 2023 and the top bracket for earnings over £150,000, 45% will be removed, and the highest rate of tax will be 40% for earnings over £50,270. The removal of which has been cancelled. Additionally, Stamp duty [2] has been cut, there is no stamp duty for properties purchased for under £250,000 and for first time buyer

In this blog, I will be covering: ·          Why prices are rising ·          What should the government/ central bank do? Inflation is the general increase of prices in an economy, typically shown by a rise in the consumer price index (CPI). CPI is the measure of the change in the price of consumer goods weighted by goods and services purchased by households, CPIH is CPI plus housing costs. In the past 12 months up to June 2022, CPIH has increased by 8.2%. This means that consumer goods in June 2022 are 8.2% more expensive than they were last year, effectively reducing the real value of money. Inflation can be caused by many things: a reduction in short-run aggregate supply (SRAS) [1] and/or an increase in aggregate demand (AD), an increase in the money supply (according to Fischer’s equation MV=PT or MV=PQ) or a change in foreign exchange rates (depending on whether the country is a net exporter or importer). Why has inflation (in the UK) been so high? The root cause is th