The anniversaries keep coming.
Yesterday it was a year to the day since the pound plunged to its all-time low against the dollar. And tomorrow the Bank of England can light a candle to mark 365 days since it swooped into the gilts market to halt the worst collapse in government bonds on record.
Within weeks, one architect of the chaos, the ex-chancellor, Kwasi Kwarteng, was out of a job, followed just 11 days later by his former boss, the ill-fated Liz Truss.
Despite all the calming balm that has been applied to the financial markets since then by the current Chancellor Jeremy Hunt and Prime Minister Rishi Sunak, the fallout from that extraordinary week is still being felt today.
Britain’s hard-won global reputation as a beacon of financial stability in an unpredictable world has only been partly restored. Confidence in the housing market was hammered by the jump in gilt yields and mortgage rates that followed Kwarteng’s mini-budget. That brought the housebuilding market grinding almost to a halt last autumn and winter. It has yet to recover.
Interest rates have topped out at 5.25% — for now. It will be for future economists to untangle the “Truss effect” from the general rise in inflation and borrowing costs caused by a multitude of other factors, particularly of course the energy crisis.
But it would seem reasonable to assume that such a damaging — and avoidable — shock to Britain’s financial infrastructure poured fuel on the fire. Some degree of calm has been restored, but it is an uneasy calm.
The long-term prize, consistent economic growth, seems as far out of reach as ever. There are many lessons to learn from the events of September 2022, but it will take far more than a year to win back the trust that was trashed that month.
