Financial markets don’t hang around. Primed for UK government U-turns, they leaped on the first reports that Liz Truss is now getting down to the task of deciding which tax measures – with the freeze on corporation tax to the fore – will have to be junked from the mini-budget. The pound rose by two cents against the dollar.
Gilts, or government IOUs, were also in demand on the whiff of a return to a version of fiscal responsibility. The yield on the 30-year gilt, which had been screaming crisis at 5.1% only 24 hours earlier, descended to 4.5% – to the great relief, one assumes, of the governor of the Bank of England, whose vow to stop buying gilts next week now looks slightly more credible. The message to the UK from markets was unmistakable: here is your escape chute, now please take it.
