ALEX BRUMMER: The US and Britain are going in completely different directions. Our prospects for economic growth seem doomed… but Trumponomics could save America from inflation

The Bank of England and the US Federal Reserve both cut their interest rates by 0.25 percent yesterday. But no one should think for a moment that our two countries are on the same economic track: far from it.

The stark reality is that fiscal policy in the United States and Britain has never been more opposite, with Keir Starmer’s government and Donald Trump’s new government moving in completely different directions.

Just hours after the vote, and before he even enters the Oval Office, Trump has enriched millions of Americans, with the stock market soaring to record highs and bitcoin prices soaring — making the average American several thousand dollars richer, at least at his least. paper.

To use his own expression, Trump’s first term was a kind of “golden age” especially for ordinary Americans. The bottom 50 percent saw their wealth increase by 127 percent between January 2017 and January 2021 — compared to a paltry 8.5 percent under Joe Biden.

But while The Donald has clearly made his fellow countrymen richer, Starmer’s doom-laden rhetoric and sky-high tax increases have left many Britons feeling significantly poorer since our July election.

It is bad enough that our Foreign Secretary, David Lammy, has called the new President ‘a sympathizer of the KKK and neo-Nazis’, while others on the front bench have been equally rude and hysterical.

In some ways, it’s even worse that Chancellor Rachel Reeves has just embarked on an economic course that is completely at odds with the “Trumponomics” we’ll see across the Atlantic over the next four years.

Reeves’ favorite economic guru is current US Treasury Secretary Janet Yellen, an outspoken, big-spending Democrat and one of the authors of ‘Bidenomics’, to which the British Chancellor has attached her banner.

Donald Trump has enriched millions of Americans, with the stock market soaring to record highs and bitcoin prices soaring

Trump, meanwhile, is a true center-right believer in the magic of the markets – having seen first-hand evidence for decades that low taxes on income, corporations and businesses are the real route to prosperity and higher living standards, not an overly large The state taxes people to the hilt and chooses how the proceeds are distributed.

It is no coincidence that Trump’s ‘brains trust’ of top economists also includes Arthur Laffer, the man behind the celebrated ‘Laffer Curve’, which argues that high tax rates reduce the government’s total tax revenue: the calculation that inspired Ronald Reagan’s free-market revolution of the 1980s.

Labour’s recent budget was foolish and, it turns out, premature, designed to copy Biden’s view that big government can fix everything. Biden’s wildly misnamed U.S. Inflation Reduction Act, which threw tens of billions of dollars at a sweeping climate change agenda, is one reason Democrats took such a blow in Tuesday’s presidential and congressional elections.

The sugar rush of federal spending may have temporarily boosted US growth by 2.7 percent in the third quarter of this year, but it has clearly failed to tame the beast of inflation – felt by millions of Americans every time they put gas in their car, buy their groceries or pay their bills.

Starmer and Reeves’ doom-laden rhetoric and rising tax increases have left many Britons feeling significantly poorer

There could be no greater difference between Trump’s approach and the top-down, statesmanlike manner of Starmer, Reeves and the defeated Democrats.

In her budget last month, Reeves raised taxes by around £40 billion, and despite her and Starmer’s airy promises to pursue ‘growth’ before the election, any measures that would have actually achieved this were virtually absent from her statement , which punished employment, farmers and ranchers. and entrepreneurs.

Of course, Trump’s approach could backfire. He has threatened heavy trade tariffs: 60 percent on Chinese goods and up to 20 percent on the rest of the world, including Britain. This could cause prices to rise domestically and global trade to falter.

Bond markets are also concerned that Trump’s massive tax cuts could worsen the budget deficit he inherited from Biden, potentially adding trillions of dollars to the U.S. national debt. However, Musk believes he can reduce government spending, just as he has reduced the workforce at his social media site X/Twitter.

Britain’s growth prospects appear doomed as we suffer the worst consequences of Reeves’ mismanaged budget. But Trumponomics offers America the chance to escape inflation and debt – and claw its way back to prosperity.