The markets are worried about Liz Truss as prime minister

The new government will need to learn fast, or face the brutal reality of a run on the pound, writes Hamish McRae

Many of the tax-cutting ideas voiced by Liz Truss will have to be postponed (BBC/AFP/Getty)

There is a real danger that the UK may have a sterling crisis on its hands and the new government must do its utmost to head that off. The financial markets have looked at the promises made by the two contenders to become the next prime minister and they are worried. Ominously, since she is the frontrunner, they are particularly worried about the plans for Liz Truss.

That is not a political judgement about her likelihood of being able to lead a durable administration, or an economic judgement on the likely success or otherwise of the policies we will get a taste of this week. It is a statement of fact.

The evidence? The plunge in the pound last week, the surge in gilt yields, and the extent to which the shares of domestically-oriented mid-cap British companies have been downgraded vis-a-vis their larger counterparts that rely more on global markets than the domestic one.