Trussonomics cannot work now – so what happens next?

What our prime minister and chancellor have managed to do is to make the UK a much riskier prospect than it was before, writes Hamish McRae

It is for the political experts to say whether Tory MPs will push out Truss and Kwarteng and install Rishi Sunak as PM (Reuters)

This isn’t going to work. The small window that the government might have had to put together a credible economic policy, which was open a week ago, has slammed shut. The financial markets have seen to that. Trussonomics is dead, even if its creators, Liz Truss and Kwasi Kwarteng, don’t yet realise this. So what happens next?

Step back to last August, when the people around Liz Truss were putting together her ideas. Stripped down, the plan was to cut taxes and borrow more, and that combination would generate faster growth that would eventually increase tax revenues. But at the beginning of August the interest rate on 10-year government stock was 1.81 per cent.

When she took office on 6 September, it was 3.09 per cent and, last Friday, even after the Bank of England intervention to hold rates down, it was 4.08 per cent.