The walls are closing in…

If a week is a long time in politics, then what of the last month? The Government’s mini-budget has provided an epoch all of its own. And the consequences are far from over. Here, Steven Hugill picks through recent events, assessing the chaos and confusion, and looking at why the Prime Minister needs her fiscal battle plan to fire – and quickly.

To bastardise that well-known Churchillian refrain, never was so much damage caused by so few, in so little time.

I am, of course, referring to the Chancellor’s mini-budget, and while it may seem a slight exaggeration, with politics, a sprinkling of hyperbole comes with the territory.

So too, with the Conservatives anyway, comes wartime and patriotic embellishment – remember the Johnsonian regime, and the Union flag hung over ministers’ shoulders during broadcast interviews, or the ‘Blitz spirit’ mantra fetishized by some MPs?

You would have thought ex-foreign secretary turned Prime Minister Liz Truss would have.

But no. She’s followed the way of her predecessor.

The only difference is that instead of talking about metaphorical battles, she’s dug a bloody great trench in the middle of her own party, while in the process putting the frighteners on the financial markets and the good many savers, house buyers and pension pot holders.

Given the ridiculousness of Johnson’s tenure, the natural inclination was to assume Truss would have stability at the top of her to-do list, printed in capital letters and coloured over with a highlighter pen.

Yet, in an astonishing first few weeks in office, she’s not only maintained the chaos of Downing Street’s previous incumbent, but managed to increase the inflation, both rhetorically and fiscally speaking.

Her (now ex-Chancellor’s) mini-budget was supposed to be a watershed moment, a wiping of the slate to provide the UK with a foothold to begin the long journey from basecamp up towards growth.

Instead, it caused an avalanche.

Spooked by the entirety of the Government’s suite of tax cuts – not least the now abandoned plans to axe the 45p rate paid by those earning £150,000 a year – markets slid.

Responding to the proposals – revealed without customary assessment from the Office for Budget Responsibility (OBR) – the pound tanked, tumbling to an all-time low against the dollar.

As the snowball grew, the International Monetary Fund swung for the former Chancellor, warning his policies would “likely increase inequality” and urging him to “consider ways to provide support that is more targeted”.

The Bank of England nudged interest rates to 2.25 per cent – their highest mark in more than a decade – and then stepped in to provide a multi-billion-pound pension funds “backstop” in an effort to stabilise prices and stave off their collapse.

The mortgage market constricted too, with figures from industry commentator Moneyfacts revealing a record 935 products were swiped from the marketplace overnight in late September.

Durham-based digital lender Atom was among the retreating throng, telling North East Times Magazine it has “paused, and will go back in when we understand more”.

Johnson’s premiership regularly foreran questions about its response to the COVID-19 pandemic with a puff of the cheeks and a nod to the ‘unprecedented’ times faced by all.

And it seems the new team in the corridors of Number Ten has picked up his penchant for the latter.

Still facing the consequences of Brexit and coronavirus, rising inflation and the ever-growing impact of the cost of living crisis on a huge swathe of society, its blueprint – extraordinary for its lack of sentiment alone – leaves the UK on a precipice.

To give a scale of the UK’s financial black hole, data from the Institute of Fiscal Studies’ latest Green Budget says it will take £62 billion of spending cuts or tax increases to stabilise or lower national debt, adding “even reversing all of the permanent tax cuts in the mini-budget would not be enough”.

And speaking after latest Office for National Statistics figures showed GDP dropped 0.3 per cent in August, David Bharier, British Chambers of Commerce head of research, warned the Chancellor’s debt-cutting plan must strike through the confusion.

He said: “The GDP fall was a warning sign the economy was already stalling before the recent market turmoil.

“Our research indicates business confidence is falling at an alarming rate (and) volatility in the currency and bond markets following Government announcements will have only exacerbated this.

“To build business confidence, the Government must rapidly provide more detail and supply side reforms, particularly at a time when businesses face the twin crises of rising interest rates and high inflation.”

The Confederation of Business Industry (CBI) gave a similar response, using findings from a financial services survey carried out alongside PwC – which cautioned third quarter industry sentiment had fallen at its fastest rate since September 2019, despite volume and profit growth – to urge clarity.

Rain Newton-Smith, CBI chief economist, said: “While activity in the financial sector looks to be in a good position, the rapid fall in sentiment and lacklustre investment intentions illustrate the challenging conditions that firms find themselves in.

“Recent market volatility stemming from the mini-budget – alongside other global developments – underlines the clear need to restore macro-stability and boost business confidence.

“The decision to bring forward the publication of the OBR forecasts and medium-term fiscal plan is the right one, and can help demonstrate to investors that the UK has a credible plan for stabilising debt to GDP at a sustainable level.”

And for Liz Truss, ensuring such is paramount, not just for the country but her career too.

Over recent days, senior Tory ministers – spinning on the media interview wheel – were forced to talk down a coup. But the noise is getting louder.

In today’s political world, it isn’t too far a stretch to speculate it may have happened by the time we start next week, let alone next month.

For a party used to doling out wartime metaphors, the idea of a conflict isn’t anything new.

At the moment, however, it’s shooting in the wrong direction, with ammunition nowhere near the calibre required for the task.

Its needs its new battle plan to work, and quickly, or the walls will fall.