Part 4: Greenbacks Reducing Pounds to Pence

This series examines Guyana’s oil & gas options globally on the eve of the Final Quarter of the 21st Year of Century 21, as the world’s richest nations pay higher costs to fight inflation and try to avoid pending recession, while also scurrying to secure adequate alternative energy supplies to replace Russian gas.

THE sliding value of the British pound has always rubbed Caribbean people in the UK the wrong way, reducing the value of their earnings and monthly remittances sent home.

Born in Britain or not, black and brown families living below or just above the poverty line have always been feeling the squeeze from the slide of the quid (pound).

But blue-blooded British pride was badly bruised when, after just a month on the job, Prime Minister Liz Trust and Chancellor of the Exchequer Kwasi Kwarteng announced policies that caused the pound’s deepest slide against the US dollar ever (1 Pound = US $1.14).

When PM Truss — the UK’s fourth prime minister in seven years — appointed her friend (Kwarteng) as the fourth chancellor in as many months, she’d also given him the top post held by Rishi Sunak, who’d opposed her in the race for the top job of Conservative Party leader — and next PM.

Sandwiching herself between Kwarteng and new Home Affairs Minister Suella Braverman on the Tory front bench at Westminster, she was accused by critics of window-dressing with dark optics to put the Opposition Labour Party leader Sir Keir Starmer in the shade.

But when, very early in the game, Kwarteng joined his friendly boss to fulfil her leadership campaign promise to grow growth without taxation, the two were accused of flirting with suicide.

Their approach was to avoid a ‘windfall tax’ on the richest corporations, silently rejecting the United Nations Secretary General’s call for doing just that, plus a serious warning by the International Monetary Fund (IMF) that cutting taxes to grow an economy is a non-starter.

From there, it was downhill for Britain’s first Black Chancellor, who’d replaced the brown candidate who fought Truss for the not-so-colourful party’s leadership.

Long before the blowback from Kwarteng’s recommended fateful dose of Trussonomics, a-la Thatcherite Reaganomics, the market was asking how he planned to pay back the 50+ billion pounds the richest would gain from her not increasing their tax rate by only six per cent (from 19 per cent to 25 per cent).

Kwarteng promised to provide the urgent prescription on October 30, but the Bank of England (Central Bank) sent early warning signals that the government’s plan would drown without a lifeline.

The bank’s seat-belt? It would buy billions worth of government bonds, at least to help shore up the quid.

Meanwhile, the long Tory knives have long been drawn at Truss’s back, and she’s clinging to power today, as her party’s top brass consider whether she’s more of a liability than an asset ahead of the 2024 national poll.

With Britons facing their highest economic nightmare in four decades, clear warnings of recession in 2023 and the UK having the highest energy bills across Europe, PM Truss seems to be increasingly losing Tory trust.

Some top Tories are actually saying Sunak was ‘embarrassingly right’ when he warned that growth couldn’t be fuelled without taxes, some even also calling for turning to him to clean up her mess.

Some argue it would be ‘absurd’ to change leader a fifth time in as many months, while those wielding the daggers say they feel that dumping her earlier than later ‘may just be the less toxic option’ to ‘reduce the damage’ the electorate looks like it will unleash on the party at the next general elections, if called tomorrow.

But it’s the new PM’s energy policy that’s attracting quiet attention from climate watchers, including the new King Charles III.

PM Truss has also promised more drilling of North Sea oil, making it clear that, like Germany returning to nuclear power for energy, she too is ready to fuel Britain’s energy with fossil fuels.

Buckingham Palace announced last week that Downing Street had ‘advised’ King Charles against attending the upcoming UN 27th Climate Change Conference of Parties (COP) Summit.

Europe is dumping all previous commitments to clean energy and easily returning to the same fossil and nuclear fuels they’d opted out of over time, putting political correctness ahead of practical economic realities.

Developing nations, Guyana and the Caribbean included, have been put on clear notice that the planet’s major polluters are less committed to even their own political commitments, once they consider their wider transnational, continental or global interests are under threat.

Just like how Britain shields its Overseas Territories operating as offshore secret banking jurisdictions for super-rich deposits, while clamping down on Caribbean and other developing nations’ efforts to create similar offshore tax-free jurisdictions, the G7 nations — the world’s seven richest — are also showing their readiness to switch their gas lines on and off, according to political need and irrespective of economic consequences.

PM Truss may have changed chancellor, but not approach — and she’ll still also be expected to invest more in digging deeper for fossil fuels, instead of following Labour’s advice to invest in green energy.

Some are actually reportedly advising it might be better and cheaper to follow up on her predecessor Boris Johnson’s undertaking to do Oil & Gas business with Guyana to address Britain’s gathering energy storm, which started getting gusty under his watch.

But energy market and Oil & Gas analysts and observers in the UK and other parts of the Commonwealth, including cautious, producing nations, are also warning that South American and Caribbean petroleum and natural gas producers such as Guyana, Suriname, Trinidad & Tobago, Venezuela and Brazil should also take warning from the ease with which Europe and North America are ready and willing to switch off when the pressure is really on – like now.

Meanwhile, the quid’s pound-to-pound fight with the greenback continues.