How the markets broke ‘Trussonomics’

The announcement of former UK prime minister Liz Truss’s “mini” Budget after almost three weeks in office marked the end of her political honeymoon.

The collapse of Truss’s economic project, dubbed “Trussonomics”, would seal her fate and deal a lasting blow to the Conservative party’s reputation for fiscal responsibility. Her ideological “mini” Budget contained £45bn of unfunded tax cuts — the biggest tax cuts for 50 years.

The response from the markets was swift. The value of sterling plunged while government borrowing costs spiked, which threatened the solvency of parts of the pension industry. The Bank of England launched an emergency government bond-buying programme in an attempt to stabilise markets.

In the weeks that followed, Truss would sack her chancellor and reverse most of her proposed tax cuts. These extraordinary events culminated in her departure from office after only 44 days — the shortest premiership in British history.

Crucially, Kwarteng decided to dispense with the independent forecasts from the Office for Budget Responsibility that are customary ahead of fiscal statements.

Three days later, new chancellor Jeremy Hunt ripped up almost all of the remaining tax cuts in a break from protocol, which was communicated in a statement before the London markets opened.

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Data and graphics by Steve Bernard