Milei beat his detractors and it's delicious to watch

Telegraph

3 days ago

A budget surplus, inflation at a five-year low and an upgraded credit rating. These are economic conditions Britain could only dream of. But they are exactly what Argentina is now boasting under the sideburned, chainsaw-wielding libertarian president Javier Milei.
When he was elected, Milei was widely dismissed as a dangerous eccentric who dubbed himself an 'anarcho-capitalist'and waved a chainsaw as a symbol of his mission to bring in savage spending cuts. When he swept to victory in 2023, Argentina was on the brink. Annual inflation had surged past 100 per cent, eventually peaking near 300 per cent. Every time Argentinians went shopping they found they had become noticeably poorer.
But within months, Milei's shock therapy took effect. His prescription was brutal austerity: one in five government workers sacked, a public sector pay-freeze, the tax agency abolished, infrastructure spending slashed nearly 80 per cent and government subsidy removed leading to the cost of a trip on the Buenos Aires metro system jumping nearly five times overnight. It was difficult, but last year Argentina returned to a budget surplus for the first time in 14 years. The annual rate of inflation also dropped to below 40 per cent, with last month's monthly rate of price rises coming in under expectation at 1.6 per cent.
He didn't stop with putting the brakes on price rises. Abolishing rent controls led to a near trebling in the number of apartments available on the market. Average rents have dropped 40 per cent even after adjusting for inflation – Zohran Mamdani, take note.
Milei still has his critics. His style is shock and awe, his methods Trumpian. On Monday his vice-president, Victoria Villarruel, told him to 'grow up' after the president shared a post on X calling her 'stupid', and 'a traitor'. They've fallen out over a motion in the senate that would raise pensions faster than inflation. Unlike British politicians – too lily-livered to tackle the triple lock on pensions, a policy that might literally bankrupt us – Milei is against more money for retirees and has said he will veto the bill that increases pensions.
He insults journalists (critics are labelled 'baboons') and ignores protesters but the economic indicators all seem to be pointing in the right direction. Milei has pulled his country back from the brink and seven in 10 Argentinians now support his agenda.
Should we in Britain, then, consider a Mileian approach to our economic crisis? The inflation we've experienced over the past few years – ticking back up to 3.6 per cent on Wednesday – is by no means Argentinian but our spending is set to pass half of GDP. Bond markets baulk at forecasts which show welfare costs climbing to £375 billion. The result: it is near impossible for the Government – or any government – to think remotely long term, instead having to survive day to day among constant speculation about the Chancellor's headroom.
Naysayers would argue Milei's approach wouldn't work here. Thatcher already carried out much of the financial deregulation here that's helped Milei bring in nearly 8 per cent growth over there and that it's easier to climb up the economic ladder from the starting point of an emerging market or developing country.
But that might be precisely the point. If Britain started to think more like a crisis economy – accepting that we're already in financial disaster – rather than warning that a crunch point is yet to come, might we be prepared to accept the kind of shock therapy Milei dished out to such success.
Long ago we should have called time on sluggish growth, the return of red tape and worsening productivity. We've avoided hyperinflation but we add billion upon billion to state spending with no improvement to our living standards in return. Perhaps we don't need someone as theatrical as Milei, and perhaps his model wouldn't fit Britain neatly. But his shock-therapy mindset – if not his chainsaw – might be exactly the prescription we've been too afraid to try.