Two acts best to avoid: a) causing an economic crisis; b) mismanaging a crisis that’s already under way. With the biggest self-imposed economic policy failure of my lifetime, the government has committed both these policy crimes in just three weeks.
That’s convenient for those writing the “what not to do” chapters of economic textbooks, but far less good for the rest of us. Market mayhem has prompted political chaos, while spending cuts and mortgage hikes lie ahead. So should a reckoning with the fundamental mistake that has brought us to this: failing to recognise that economic context matters and that, with the arrival of higher interest rates, the context has changed.
