New finance minister Kwarteng gives UK PM Truss a key ally in the economic storm

Kwasi Kwarteng arrives at number 10 Downing Street, in London, Britain September 6, 2022. REUTERS/Phil Noble

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  • Truss chooses an ally as Chancellor of the Exchequer
  • Kwarteng has experience in handling the energy crisis
  • Inspired by Thatcher but showed a pragmatic streak
  • Britain’s first black chancellor visited Eton and Cambridge

LONDON, Sept 6 (Reuters) – In Kwasi Kwarteng, Prime Minister Liz Truss has chosen an ideological ally as Britain’s new finance minister, tasking him with tackling the cost of living crisis with a plan to cut taxes and big expenses that has worried markets.

The new Chancellor of the Exchequer, Kwarteng, 47, inherits an economy in crisis. It is expected to enter a long recession later this year, with inflation at its highest level in 40 years and limits on options to stimulate growth. Read more

Business and energy minister under outgoing prime minister Boris Johnson, Kwarteng backs his new boss’s low-tax, free-market economy approach, a meeting of minds that could signal a relationship heartfelt heart of government.

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That would contrast with the rift that has developed between Johnson and his finance minister Rishi Sunak.

“Kwasi Kwarteng has clearly been a big part of the Truss team… So she’s putting in someone who she thinks shares her kind of philosophy and governance priorities,” said Jill Rutter, senior researcher at the group of reflection Institute for Government and former Treasury official.

“The energy and business experience should stand him in good stead, in terms of understanding the real economy…what he hasn’t done is a lot of service work public or a big expense job.”

Britain’s first black Chancellor, Kwarteng is the son of Ghanaian immigrants and earned a so-called ‘double first’ at Cambridge University in Classics and History, also attending Harvard University in the US .

Thatcher admirer

Kwarteng is an economic historian and, like many in the ruling Conservative Party, says he admires Thatcher and the right-wing economic legacy she left, even writing a book about her.

But he played down the extent to which his anti-statist ideals can be realized in the modern economy, saying reliving his approach today is “completely wrong”.

“The answers to this don’t come out of the 1980s textbook,” he told the BBC in a podcast last year of his political ideology, giving the example of achieving goals of net zero emissions as an area where government involvement is essential.

“You have to adapt to the context in which you live.”

The context in 2022 – with soaring inflation, higher interest rates and growing industrial action – is much more like the conditions under Thatcher than when he spoke.

He said that under Truss’s leadership, the government would cut taxes and act to tackle the worsening cost of living crisis, and that there should be tax relief to help people get through the winter. Read more

An announcement is expected on Thursday, with a bill freeze among the options Truss is considering. Read more

Kwarteng’s former role as head of the Department for Business, Energy and Industrial Strategy (BEIS) means he has met regularly with energy sector officials and has previously reflected on what he is up to. British economy is expected to look like in the medium term after leaving the European Union.

A committed Brexit supporter, Kwarteng has endeared himself to the right of the party, making a name for himself with his views in favor of lower taxes, a smaller state and deregulation in his book ‘Britannia Unchained’ , co-authored with Truss and other lawmakers.

However, in government he was more pragmatic. Kwarteng halted a review of working practice regulations when he became business minister last year, saying Brexit was not about ‘cutting workers’ rights, trying to race to the bottom or trying to cut wages”.

PRETTY HARD?

He also oversaw the introduction of the National Security and Investment Law which saw the government intervene in a few Chinese-backed takeover bids. Read more

But he is growing increasingly frustrated with Britain’s industries’ reliance on government support, say those who know him.

Citing an example of this, a Westminster source said Kwarteng was hostile to further requests for support from CF Industries, whose ammonia production produces carbon dioxide in the pubs and agriculture industries, saying with anger at the helpers that he wouldn’t give them another penny. CF Industries halted operations again last month. Read more

‘I wouldn’t call him the most creative decision-maker, but he will listen to ideas and consider viewpoints,’ the Westminster source said.

Some of his Tory colleagues question what he actually achieved at BEIS and his credentials at the Ministry of Finance.

‘Some say he’s not tough enough to do the job of chancellor at a time when Britain needs someone who can get things done,’ a lawmaker said, while a veteran conservative said the Treasury “would approve of his brains (but) disapprove of his independence”. .”

Like Johnson, Kwarteng went to school at the prestigious Eton College on a scholarship.

While at Cambridge he was a member of a winning team on the popular television quiz show University Challenge, and he wrote several books, including one on the history of the British Empire.

He said that although he suffered racial slurs growing up in the 1980s, he sees himself as a symbol of no one other than his constituents in Spelthorne, which borders the south-west suburb of London.

“Actually, I think it’s not that bad,” he said after being named a prominent black conservative prime minister. “I think once you take stock, I don’t think it’s something that comes back that much.”

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Reporting by Alistair Smout, Elizabeth Piper and Sinead Cruise; Editing by Andrew Cawthorne

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