The New Statesman: politics and culture Liz Truss is still, in some sense, running the country
Sep 26, 2025
Three years on from her controversial mini-Budget, Liz Truss's legacy looms large over UK politics. The market chaos she incited is dissected, revealing fears of a 'Liz Truss moment' in future governance. Discussion turns to her claims about the Bank of England and how her downfall has tempered fiscal strategies of subsequent governments. Truss reflects on her controversial views and perceived conspiracies, pondering the role of economic officials in warning politicians. The conversation is a deep dive into the intersection of politics, economics, and personal accountability.
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Markets Reacted, Not The Real Economy
- The UK didn't suffer an immediate recession after the mini-budget but gilts yields spiked sharply, creating market panic.
- That spike threatened pension funds due to their liability-driven strategies and borrowing-linked margin calls.
Three Drivers Of The Gilt Crisis
- Three factors caused the crisis: the energy cap, the mini-budget's borrowing, and the Bank of England's planned gilt sales.
- Combined, they signalled a sudden large supply of gilts to markets and amplified yield increases.
Timing Between Bank And Treasury Mattered
- Timing and sequencing of central bank and fiscal announcements matter for market confidence.
- Truss argues the Bank of England's public plan to reduce its gilt holdings worsened market reactions to her fiscal plans.