They called it the ‘moron premium’. It was September 23, 2022, and Liz Truss‘s nascent government had announced £45billion of tax cuts – funded entirely by borrowing, rather than corresponding cuts to public spending.
The markets went haywire. The notorious ‘bond vigilantes’ who trade global government debt were appalled at her fiscal irresponsibility. They dumped British bonds, known as gilts, en masse.
In response, the interest rate or ‘yield’ on those ten-year bonds exploded: from 3.03 per cent to 4.42 per cent. This made it agonisingly more expensive for Truss and her equally inept chancellor Kwasi Kwarteng to borrow.
The Treasury’s bill to
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