Halloween may have been almost a month ago, but there was a ghost haunting Labour’s autumn budget: the spectre of the bond markets.
In her speech in the Commons, chancellor Rachel Reeves referred to Liz Truss’s disastrous mini-budget in 2022 as some kind of cautionary tale, and much of the post-budget analysis in the press focused on the market reactions, underscoring the fact that it has since become received wisdom that a government is only ever one fiscally irresponsible decision away from crisis.
This is an extension of the idea that governments are like households and must practice thrift or face ruin. Just as a mortgage provider would be loath to lend to you if your outgoings regularly outstripped your earnings, so it seems intuitive that the bond markets would baulk at governments that outspend their means.
