Liz Truss has provoked widespread mockery after suggesting that the UK economy would be in “better shape” had her mini-budget been implemented.
The budget, announced in September 2022, is widely regarded as one of the most disastrous economic policies in recent UK history.
It aimed to stimulate growth through aggressive tax cuts, but immediately sent financial markets into turmoil, undermining both investor confidence and the government’s credibility.
The centrepiece of Truss’s plan was the abolition of the top 45 per cent income tax rate for the highest earners, alongside other tax cuts totalling £45 billion, which were to be funded entirely through borrowing.
The lack of clarity on how this would be paid for, coupled with the absence of an accompanying economic forecast from the Office for Budget Responsibility, sent shockwaves through financial markets.
One of the immediate effects of the mini-budget was a sharp drop in the value of the pound, which plummeted to its lowest level against the US dollar in decades.
This, in turn, led to higher import costs and increased inflationary pressure.
Investors also began dumping government bonds, causing a surge in borrowing costs and forcing the Bank of England to step in with an emergency intervention to stabilize the bond market.
The rapid spike in interest rates created ripple effects across the economy, including a sharp rise in mortgage rates, leaving homeowners facing higher monthly payments and further straining consumer confidence.
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