In a single week, Britain has gone from being one among many nations facing fierce economic headwinds to being a financial basket case, its currency plunging, bond yields and mortgage rates rising and pension funds scrambling to stay afloat.
One question has repeatedly popped up: why did the mini-Budget trigger such chaos, given that most of it had already been trailed and that the cost of the unexpected 1p cut to the basic rate of income tax and elimination of the top rate pales in comparison to the energy price guarantee.
This misses two key things. First, the government’s hand was forced on energy bills. Their policy will save livelihoods and perhaps even lives. It’s not cheap, but it’s perfectly rational. Last Friday’s tax cuts, by comparison, were an unforced fiscal error. The number may be smaller, but it signals a departure from sensible economic thinking.