Osborne’s Revenge

Izzy Finkel

In the last few days, opponents of the Truss-Kwarteng mini-budget have seen it roundly demolished, with one of its architects banished and the other seemingly retained as ornament. And yet its critics may come to regret their victory. Jeremy Hunt has scrapped most of the tax-cutting measures mooted last month and is now poking around Whitehall with his scissors, promising that no department is ‘ring-fenced’. With the reversal of the mini-budget comes a return to the logic of austerity, which is precisely – to steal David Cameron’s line – what ‘got us into this mess’.

Hunt appears to have been paying attention through the fiasco of recent weeks, and has noticed what is baffling many Britons newly obliged to study the markets: that bond-market sentiment runs on vibes. The new chancellor, who has the air of an actuary but no actual Treasury experience, has appointed an advisory council to burnish his cost-cutting credentials. They include the éminence grise of the George Osborne years, Rupert Harrison, now a fund manager but once the former-former-former-former-former-former chancellor’s chief of staff.

Harrison may have moderated his views in the intervening seven years, a period when austerity has been discredited from all angles, helped in part by the prevalence of cheap money that made it unwise not to borrow liberally to invest. He seems still to be a true believer, but in any case the purpose of his appointment was as a signal to the markets, based less on whatever he may think now than on his status as the avatar of austerity.

Sure enough, the sop to Cameron-era nostalgists seems to have done the trick, with the stabilisation in UK assets bolstering hopes that so-called bond vigilantes will tire of their sport. Winning the respect – or at least the indifference – of the markets really does matter, even if it riles some on the left as much as the right, who, clinging to vain hopes of economic sovereignty, would prefer to ignore the UK’s risk premiums.

Not all the damage inflicted by Tufton Street’s arsonists will be reversible, and even in the best-case scenario we are back in a world of underfunded public services and rising energy bills – themselves partly the result of the government’s failure to make timely capital expenditures, such as investing in gas storage facilities, when it had the chance. Hunt suggests more short-termism is to come.

The upshot is that those who used ‘unfunded tax cuts’ as an easy shorthand for everything that was wrong with the Truss-Kwarteng mini-budget may have won the battle, but the ascendancy of the logic implied by that soundbite means the war is now being fought on hostile territory.


  • 19 October 2022 at 9:27pm
    Chris Robinson says:
    The sooner we abandon "vain hopes of economic sovereignty" (accepting Mark Carney's acceptance of reliance on strangers) the better. If we rejoin the EU our credit may eventually be ranked with Paris and Frankfurt rather than Athens or Budapest but limits to economic sovereignty are, in any case, inevitable. Some sort of austerity, however dressed, will occur without growth and 2.5% growth itself at very best will only occur in waves.
    Chris Robinson

    • 21 October 2022 at 8:34am
      BillWAF says: @ Chris Robinson
      Serious Question: Why would the EU allow the UK to rejoin? It is not worth the constant garbage.

    • 25 October 2022 at 9:48am
      Philip Hymas says: @ Chris Robinson
      Please don’t try to rejoin the European Union! I’ve lived in France for 40 years and worked for British companies here. I am one of the 3 million British ex-pats who couldn’t vote in the referendum thanks to Tory dictatorship. So please don’t try to come back even if it would be good for you as we really couldn’t take the hassle. By the way - give the northern Irish the chance to be part of Eire- that would solve the protocol problem.