Liz Truss is rerunning the 1972 Barber disaster budget. Here's what happened then...

The 1972 budget of then Tory Chancellor Anthony Barber is regarded as the worst ever. Liz Truss is repeating it. So things are looking economically very ropey right now, but if lessons are to be learned from it, we can always look to the past, because it’s almost certainly been tried before. £45bn of tax cuts from Truss and Co in the mistaken belief this will lead to growth, the largest round of tax cuts since 1972 and Anthony Barber’s ‘Dash for Growth’ budget which to this day is still referred to as the worst budget of modern political times. If you thought George Osborne’s Omnishambles budget was bad, Barber made him look like a maths whizz. So what happened then and what does that tell us about what could happen now? Well, Anthony Barber was Tory PM Ted Heath’s Chancellor from 1970 to 1974 when Harold Wilson won the general election that year, putting Labour in power. Barber called his 1972 budget a dash for growth, much like Kwasi Kwarteng has called his a budget for growth and both started the same way – tax cuts. In 1972 Barber slashed taxes to the equivalent of 2% of UK GDP, roughly some £48bn by today’s standards. The results were similar to what we’re seeing today, stagflation occurring where inflation remains high as economic activity slows, unemployment rising as recession looms. We’re seeing the pound tanking now, it took a bit longer in the 70’s to do likewise, it led to the so-called 1976 Sterling Crisis, where the pound became so devalued as a result of Barber’s budget, in order to save it, the Labour government of James Callaghan had to borrow the equivalent of £26 billion in todays money just to preserve it’s value where it was and stop it eroding further, at the time it was the largest loan from the IMF that had ever been issued. It was a disaster. Miners went on strike over it, a 3 day week was brought in to preserve energy reserves, it brought the UK economy to the brink of collapse. So what of now? Some of this is familiar already, but what will this cost us this time? Another humungous IMF loan to save the pound? Inflation was more than 7% lower in 1972 than it is today, so how much worse will the damage be this time, especially as Liz Truss insists she’s sticking to her guns. History says otherwise, the Tory reputation for economic competence is gone and indeed it was the same mistake by the same party then as it is now. Tories talking of this as an extinction level threat to their party are right and I think if they don’t remove Truss fast, the whole lot of them will go down, but taking the country with them.