How high a price will Truss pay?

This year’s Conservative party conference was supposed to be a moment of celebration for the new Tory leader. Instead there is a sense of mounting alarm. Liz Truss’s radicalism has been met with something approaching panic by both the markets and the public. The Bank of England has had to intervene in the gilts market to prevent ‘a material risk to UK financial stability’. The pound hit a 230-year low against the dollar. Meanwhile, Labour has moved into a 17-point lead in the polls.

YouGov finds that just 12 per cent of the public view the government’s so-called ‘fiscal event’ as affordable. Only 19 per cent consider it fair. Tory activists at conference will give Truss the benefit of the doubt. After all, she has a mandate from the membership for her agenda – to cut taxes, come what may. During the leadership campaign, she derided the idea of trying to balance the books as ‘abacus economics’. She is doing what she said she would.

Inside government, ministers are divided over what to do next. There are those who think that a period of calm is required, that the markets need to be reassured after what they call ‘the shock and awe’ of last week’s economic events. They think that the government needs to emphasise spending restraint. Then there are those in Truss’s circle who think the right thing to do is to double down, and talk about more tax cuts to come.

After the reaction to last week’s announcements, will the government continue to pick fights with the UK’s institutions? Tom Scholar was fired as Treasury permanent secretary (there are rumours of more civil service dismissals being on the way) and the Office for Budget Responsibility was told its forecast was not required last week, as it was technically a ‘fiscal event’, not a Budget.