We face New Depression and Tory wipeout due to Establishment idiocy

Liz Truss Rishi Sunak and Boris Johnson: But who’s really in charge? asks John Longworth (Image: Getty)Removed ostensibly for the crime of eating cake with colleagues during a lock down he did not truly want and was unnecessary… but one he forced others to comply with. It is perhaps even more incredulous that his replacement, fairly elected by the membership of the Conservative Party after a lengthy examination process, should he usurped by the same baying mob who did for Prime Minister Johnson – and replaced by the loser, who happened to be the choice of the establishment blob.This on the basis that the democratically elected Prime Minister Truss had transgressed by having the effrontery to suggest that she could implement an optimistic economic policy of supply side stimulus and self funding growth. Which in turn was at odds with the EU and UK Treasury orthodoxy and at odds with the facilitation of Rejoin.These two circumstances alone raise serious questions about the state of democracy versus the control of the Establishment, in Britain today.The events reminded me of pleasant lunches I used to have with Michael Heseltine where he was serious in declaring that elections and democracy only served the purpose of giving added legitimacy to the rule of those naturally in charge, legitimacy to exercise power. Entitlement writ large.What is even more ironic about the fall of Ms Truss is that her replacement was the very person who spent upwards of £500 billion in ‘unfunded’ hand outs to people in order to allow them not to work and thus to crash the economy. Yet he and his cohorts brought down PM Truss on the basis of £50 billion of self funding borrowing, self funded because growth does that, it generates funds.Of course, Ms Truss also made a mistake in wanting to hand out up-to £150billion open ended energy support, itself only necessary because of a totally flawed adherence to a futile and virtue signalling Net Zero policy adopted by the Conservative Party, but that is another story.If there are still independent historians in 30 years time (who have not been cancelled or are under the command of the EU or the globalists) and they come to research and write about this period of history, there will no doubt be interesting and concerning curiosities uncovered.Since we now appear to be ruled not by a sovereign Parliament elected by the people, but by overweening and self-appointed technocrats such as the Bank of England (BoE), it is an interesting curiosity that it did not choose to raise interest rates as it should have and has been seriously behind the curve of the US Fed.This is particularly significant given the financial regulator, of which the current Governor of the BoE was head, and the BoE itself, allowed pension funds to invest in higher risk forms of bonds and paper (cash) such that they became vulnerable to interest rate rises and to a lack of liquidity. This apparently included the BoE own pension fund.It was this that spooked markets running up to and after the mini budget. Did the BoE really think interest rates would not rise quickly given inflationary pressures?And yet the Bank and the blob blamed Mr Kwarteng. Possibly both a weapon of mass distraction from their own incompetence but also a convenient tool in order to insert the establishment candidate in no 10.I suppose it would not have helped that Mr Kwarteng sacked the top Mandarin in the all powerful Treasury and that PM Truss hinted at a long overdue review of the Bank.There is no doubt this latter needs urgent attention: a new Governor, a new mandate , a new constitution, or perhaps all three. But there is equally no doubt that hell hath no fury like Mandarins scorned.In order to oust Kwasinomics and its protagonists, it was of course necessary to rubbish it.As a consequence, instead of having the virtuous cycle of growth, generating tax to pay off debt over the long term and maintain public services, we are now facing a vicious cycle of austerity; cuts and tax rises.This will lead to recession which will force more cuts and tax rises as the tax receipts dry up. A cycle heading towards a Great Depression.This is totally unnecessary economic vandalism simply in order to maintain our close link with the EU economic cycle and to grant power to the establishment man.The BoE and the Treasury can sleep soundly and the Rejoiners can rejoice.After the First World War, debt was repaid over a very long period, not balancing the books within a year. Eventually as we fell into recession in the 1930’s the reaction from the economist, Keyenes, was to stimulate growth through public sector spending. It worked.Following the war on Covid and forseeing the looming global recession Mr Kwarteng was proposing the same recipe but using the much more efficient and productive route of stimulating growth via the private sector and paying off debt in the longer term.The mini budget was hailed by many newspapers as indicative of at last a truly Conservative government and supported in large part by Labour.The reaction of markets was not essentially to the mini budget but to circumstances that were happening in parallel and eventually to a much more sinister and orchestrated witch hunt.About 85 percent of businesses are family owned or run. They are the backbone of the economy and employment. They are naturally pro-enterprise, innovative, entrepreneurial and would naturally favour a growth agenda.Instead they are now condemned to austerity, job losses and business failure. They will not forget or forgive and if the Labour opposition get their act together on business and the economy there could well be a wipe out for the Conservatives at the next election.When the history is written what has happened should rank as the greatest missed opportunity of our age and an act of bewildering idiocy, purely in order to facilitate and maintain the power of the establishment.John LONGWORTH is Chairman of the Independent Business Network of family businesses, former Director General of the British Chambers of Commerce and MEP.