Mervyn King said the unsayable about Britain’s economy

This morning the BBC hosted a current Tory leadership contender and the leader of the opposition on Sunday with Laura Kuenssberg. Yet the most insightful comments came from one of the panel members: Lord Mervyn King, former governor of the Bank of England between 2003 and 2013. Asked by Kuenssberg about the narrative that’s doing the rounds with some Truss supporters – that markets ‘bullied’ Truss out of her plans and out of office – King offered up a robust response and a clear explanation of what had gone so badly wrong:

Markets are not in charge. Governments and central banks are. Markets respond to the announcements made by government and central banks. And central banks have lost control of inflation, government lost control of the public finance; not surprising that markets respond to that.

I think all central banks in the west, interestingly, made the same mistake. And during Covid, when the economy was actually contracting because of lockdown, central banks decided it was a good time to print a lot of money.