What is a crash anyway?

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Whisper it quietly, but it’s entirely possible that Liz Truss is justified in arguing that she did not ‘crash the economy’ with her ill-fated non-budget. There were, after all, other people involved, and the Bank of England’s decision-taking at the time didn’t help. Above all, there is no clear definition of what ‘crash the economy’ actually means; it isn’t exactly a well-established technical term. The political wisdom of trying to recover her reputation by issuing a ‘cease-and-desist’ letter, with its implicit suggestion of potential legal action for defamation, is another question entirely. Not only does it draw attention, yet again, to the damage she managed to do, it positively invites a response along the lines of that of the defendant in the infamous case of Arkell vs Pressdram – and whilst his words avoid the choice Anglo-Saxon of the original, Starmer’s response duly obliges. I somehow doubt that the case will advance much further. The prospect of being cross-examined in the witness box as to what she did or did not do, and trying to explain why the crisis was technically not in fact a ‘crash’ at all seems likely only to draw even more attention to her perceived failures, as well as being doomed to fail.

In the meantime, ‘the markets’ are playing up again today, with Rachel Reeves on the receiving end of their activity. Or, rather, the speculators and gamblers who always have an eye open for a chance to make a few pennies on marginal price movements are betting that she cannot honour her commitments on tax and borrowing whilst sticking to her fiscal rules. If I had a million or two to spare, I might even be tempted to join them; it looks like a pretty safe bet to me. Her determination to stick to fiscal rules which she herself wrote and which are entirely arbitrary has constrained her ability to do what she has said she will do on tax and borrowing, and she has no-one to blame but herself for not only putting the rock and the hard place into position, but for then rushing to place herself between them. Sooner or later, something will give. The gamblers will walk away with their profits and Starmer may well need to find a new Chancellor.

It’s all so unnecessary. The government could order the BoE to stop its quantitative tightening; it could order the Bank to reduce interest rates; it could change its fiscal rules. It prefers to pander to the prevailing conservative/ neoliberal economic ideology which has done so much to damage prospects for most people in recent decades. And that risks facilitating those who want to double down on that ideology.