Who or what could be to blame for the wild economic turmoil that immediately followed Kwasi Kwarteng’s mini-budget on Friday?
Some – such as the IMF, US Federal Reserve officials, a former US Treasury secretary, many leading bankers and economists, and a number of Tory MPs – think the two events are directly related.
But amid a barrage of criticism, the prime minister and a band of her loyal allies have emerged to explain who they think is really to blame.
Vladimir Putin
Liz Truss embarked on local media interviews on Thursday with one culprit in mind, and wasn’t going to be diverted from her script: “This is about Putin and the war in Ukraine.” “So the Bank of England’s action [on Wednesday] was the fault of Vladimir Putin, was it?” asked James Hanson of BBC Radio Bristol. A pause. “What I was saying is it is very difficult and stormy times …”
Remainers
To the hedge fund manager and Tory donor Crispin Odey, the current crisis was triggered by “remainers” in the City who, he told the Telegraph, “have just decided that they hate this government. Obviously Kwasi they hate now as well, and they think Liz Truss is useless. They can’t stand poor Jacob Rees-Mogg.”. That’s the same Crispin Odey who on Tuesday described his lucrative bets against government bonds amid the crashing economy as “the gifts that keep on giving”.
The Bank of England
Britain’s central bank may have been forced to make a dramatic intervention on Wednesday to stop pension funds collapsing, but to Conservative MP Andrew Bridgen, the Bank itself was to blame.
“The Bank of England has let us down badly by not putting up interest rates last year,” he told the Today programme, adding that it had both “been slightly asleep on the job” and “let the horse bolt from the stable”.
Fracking
Or more specifically, the lack of it. The pound and euro were at a record low against the dollar, Bridgen went on, “because of what has happened in Ukraine with Mr Putin and his invasion”, and because the US is more energy self-sufficient.
“They have energy security within their own borders. We haven’t, and had we been fracking two years ago we would have been in a better place.”
HS2
More Bridgen analysis, in the curious absence of many other Tory MPs willing to speak out in defence of the mini-budget. Kwarteng could have cut spending before his announcement, the MP conceded – “For instance if the white elephant that is HS2 were cut that would show more fiscal control and control of spending.”
Keir Starmer
“You really think this is about tax cuts?… Come off it!” Rely on true Brexit believer Daniel Hannan to find the real culprit: Labour.
“What we have seen since Friday is partly a market adjustment to the increased probability that Sir Keir Starmer will win in 2024 or 2025 – leading to higher taxes, higher spending, and a weaker economy,” he wrote on Conservative Home. The timing is obviously an unfortunate coincidence.
