The Guardian view on Kwasi Kwarteng: pride before a fall

theguardian.com:

Having beckoned the chancellor, Kwasi Kwarteng, with the lure of growth, the invisible hand of the market has grabbed his plans by the scruff of the neck and shaken them mercilessly. Investors plainly do not believe that tax cuts will lead to the economic growth Mr Kwarteng desires. They worry that the Bank of England won’t raise rates to bring down inflation. The gyrations in the markets led to emergency statements from the Treasury and the Bank on Monday afternoon that sought to restore confidence. It’s unclear whether these will be enough to calm things down.

The mess was predictable – and largely down to Mr Kwarteng’s refusal to explain what he was doing. City analysts were left in the dark on Friday about how the government would increase the value of goods and services in the economy. Mr Kwarteng also did not provide a comprehensive Treasury plan. He shrugged when asked about market reaction to his ideas, nonchalantly saying they“will react as they will”. While Mr Kwarteng had little to say about the markets, they had a lot to say to him.

The pound bounced like a yo-yo on Monday. Government borrowing costs – the interest on gilts – rose sharply. Lenders pulled their mortgage products. By the end of the day, Mr Kwarteng had to come clean about his programme. He said he would, by November, explain how the government intended to make good on his promise to reduce national debt in the medium term and that this would be vetted by the Office for Budget Responsibility. While the budget won’t arrive until next spring, Mr Kwarteng said that there would be detailed proposals released in key areas – such as immigration – in the next two months. The government remains committed to austerity. To have public sector debt falling by