"Tories Forget the Purpose of Tax Cuts: Economic Growth

By overemphasizing fiscal balance, they conditioned the public to be skeptical of supply-side proposals.

Wall Street Journal: 8th March 2024: Joseph C. Sternberg identifies what went wrong with the UK Spring Budget. 

...The Tories offered a series of tax reductions in a nod to the party’s disaffected free-market wing and in an effort to relieve an economy laboring under the highest ratio of tax revenue to gross domestic product since the aftermath of World War II. The public more or less shrugged...

...Prime Minister Rishi Sunak and Chancellor Jeremy Hunt persuaded themselves and their party that the public wanted the Tories to deliver fiscal responsibility. This view held that Ms. Truss had spooked markets and businesses by proposing unfunded tax cuts targeted at the supply side of the economy. The Tories instead should promise to restore economic stability by balancing the budget first and only then delivering tax relief...

Messrs. Sunak and Hunt walked straight into a trap. They misdiagnosed the market turmoil that coincided with Ms. Truss’s attempted supply-side big bang. Gyrations in the government bond market and a dip in the value of the pound were caused more by past and present bad monetary policy than by a tax plan that never took effect or even by Ms. Truss’s refusal to submit that tax plan to the Office of Budget Responsibility (OBR)... The new prime minister and chancellor’s proposed solution...made them hostage to precisely the antigrowth forces from which Ms. Truss had hoped to free the Tories.

...Ms. Truss wanted to argue, and a noticeable portion of the Tory base may still believe, that Britain’s economy as a whole can’t afford not to cut taxes that otherwise punish entrepreneurship, investment and work. Now that the Tories instead have set out to persuade the electorate that affordability is solely a function of fiscal balance, voters are judging Messrs. Sunak and Hunt on that basis...

The left’s story is that higher taxes ought to support a more generous welfare state. The conservative story used to be that a well-crafted tax code could increase prosperity. Mr. Hunt this week discovered the perils of drifting away from that pitch.

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