Javier Milei’s Economic Revolution Triumphs in Argentina
The UK and Argentina share a history laced with irony. Argentina’s President Javier Milei idolizes Margaret Thatcher, the British leader behind the controversial sinking of the ARA General Belgrano in the 1982 Falklands War. Milei draws inspiration from her for his 2023 economic revolution.
Milei’s Midterm Victory Shocks Skeptics
On the Falklands issue, Milei envisions locals choosing Argentina’s prosperity. Yet his ‘Milei Revolution’ faced doubts amid UK economic stagnation. Despite setbacks, Milei staged a stunning comeback in the October 26 midterms—the first national test of his harsh shock therapy after two years of spending cuts.
Six weeks after provincial losses, Milei’s La Libertad Avanza (LLA) party surged to 41% nationally, defying predictions. Explanations include energized anti-Peronist voters, claims of purged fraudulent votes, or alleged US aid. Markets erupted: the peso jumped 8% against the dollar, sovereign bonds rose 20%, and bank stocks like Grupo Financiero Galicia soared 130%.
Though still a minority, LLA doubled its seats, blocking opposition veto overrides. This bolsters Milei’s authority, but converting market hype into real gains amid Argentina’s volatile politics remains challenging.
Bold Reforms Tame Hyperinflation
Argentines endure a high-stakes trial of fiscal restraint and deregulation. Investors see stabilizing inflation and growth signals, but locals bear heavy costs. Milei inherited 15,000% annualized inflation, 15% GDP deficit, and zero borrowing power. He slashed ministries by half, fired thousands, achieving a fiscal surplus by March 2024. Monthly inflation crashed from 25% to 2.4% by November 2024.
- Rent controls ended: prices fell 30%, supply tripled (e.g., nice BA flat at £60/night).
- Subsidy cuts hiked bills—electricity from $8 to $32 monthly.
- Poverty hit 57%, later easing to 32% by mid-2025; unemployment peaked at 8%.
Defending an overvalued peso drained reserves, fueling doubts and opponent gains.
US Lifeline Secures the Path Forward
A US $20 billion Treasury swap and bank package stabilized sentiment. Treasury Secretary Scott Bessent framed it as protecting IMF loans, profiting the US. Strategically, it counters China’s influence over Argentina’s resources like shale oil and agriculture.
Milei eyes labor, pension, and tax reforms to formalize informal jobs, despite union backlash risks. Key challenge: transitioning to a floating peso. A self-sustaining currency would mark true recovery, rivaling top economies.
Lessons for the UK
The UK’s fiscal excess mirrors Argentina’s perils. Milei’s success shows delays amplify pain. Argentines have a truthful leader who endured; the UK wonders how far it must fall before facing reality.
