It’s worth saying at the outset that not everything that went wrong last autumn – with Britain’s financial markets thrown into chaos and the pound sliding to an all-time low against the US dollar – can be laid at the door of Liz Truss.
There were plenty of other explanations for why Britain was vulnerable to an economic shock.
Most conspicuously, the Bank of England was reversing quantitative easing, its epic bond-buying scheme. The financial markets were suddenly asked to buy an extra piece of the government bonds they sold to the bank years ago. It was a recipe for indigestion.
That economy was still recovering from the pandemic, from the lockdowns and the supply chain disruption that followed.
The public finances were in a particularly weak position, with the national debt having risen sharply to finance the leave scheme.
Much of the economic data at the time suggested that the UK was worse hit than any other major economy, and that the pound was already falling, falling against the US dollar from early 2022.
In other words, Britain looked vulnerable. There were bombs buried all over the financial markets. But this is where things get less flattering for the former prime minister because there is no doubt that what pushed Britain over the edge was the behavior of Mrs Truss and her team.
You can see as much when you look at various measures of financial stress, from the strength of the pound to the height of government bond yields to credit default rates, which signal how likely Britain is to default on its debt.
All peaked in the days following the mini-budget. And everyone fell back again when it became clear that the Prime Minister would resign. The pound has recovered and the main explanation behind higher government bond yields is not credibility but rising interest rates.
Ms Truss acknowledged her part in this on Monday when she said “it’s certainly true that I didn’t just try to fatten the pig on market day; I also tried to raise the pig and slaughter it. I admit that.”
However, this is not a random problem. This was the biggest problem at the time. Markets did not pass judgment on the intricacies of the mini-budget and its various measures. They made a bigger, simpler statement: we don’t trust you.
The problem wasn’t the Truss plan for growth, it was the ham-fisted nature of the way she did it. At a time when Britain (like many developed economies) was on the financial precipice, this tipped the country over the edge.
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In a way, those on the right of the Tory party should be reassured by such a verdict. What happened last fall should not end the long-running debates about what to do with taxes. That should not end the conversation about how to boost economic growth.
In fact, Britain still faces many of the same problems it did last year: weak growth, high current account and budget deficits, a wayward set of economic policies and some big question marks about monetary policy.
The markets didn’t pass judgment on all that. It is much simpler than that. They lost faith in the government. It spoiled its credibility and for a few weeks we danced on the edge of the crisis.
Then Liz Truss left office and the credibility crisis ended. Time to move on.