A week really is a long time in politics. When Kwasi Kwarteng sat down after his great announcement, he seemed to be master of all he surveyed. The new Chancellor was full of confidence as he expounded his strategy for growth. In her reply, Rachel Reeves did not even mention the 45p rate cut. This minor excursion into Lafferism was surely more a matter of symbolism than of great fiscal consequence. Everything seemed on course. Then everything went awry.
It is still not clear why the markets were so comprehensively spooked. Herd instinct and panic played a part, and there is an irony. In recent weeks, the Bank of England had come under a lot of criticism from Government sources. But in the end, the Bank rushed to the rescue and saw off the spookers. A new injection of quantitative easing restored a tense stability, though more confidence-building rhetoric will be required from the Chancellor and the PM.
So what went wrong? First, there is no reason to blame the two principal aspects of the Government’s strategy. The first was a bold move to prevent an energy price crisis. The second, measures to stimulate the UK’s long-term growth rate, on which so much depends: improved welfare services, the spread of prosperity to those regions which have been left behind – levelling up – and higher living standards all round. Those are all laudable goals, yet the public is barely aware of them.