The Conservatives should be brave enough to take on this stupid talking point"

The Critic: 27th March 2024: Christopher Snowdon (Institute of Economic Affairs) explains just what is to blame for high mortgage rates and similar experienced over past couple of years

"...the “Truss crashed the economy” meme has spread far beyond card-carrying Labour supporters...

but...She [Truss] did not crash the economy and mortgage rates today have nothing to do with her or her mini-budget... There is no technical definition of “crashing the economy” but using GDP as the best measure of the economy, it has conspicuously crashed twice since 2007, including the worst nosedive in 300 years. In neither case was Liz Truss in charge...

...What did happen is that bond markets became alarmed by a debt-financed dash for growth... But the spike in bond yields lasted less than a month [30 year bond yields in the UK and USA are shown in graph in full article] and the spike in mortgage rates did not last much longer... If you happened to take out a mortgage (or remortgaged) in the autumn of 2022, you can reasonably blame Liz Truss for getting a rate closer to 6 per cent than 5 per cent, but it is absurd to blame the mini-budget for mortgage rates today. 

The main determinant of UK mortgage rates is Bank Rate and that is determined by inflation and expectations of inflation...A [2022] mini-budget that was undone before it could be implemented caused a month of chaos but has made virtually no difference to any macroeconomic variables since October 2022 when inflation peaked...

The Conservative Party’s reluctance to challenge the narrative that Liz Truss caused the cost of living crisis is understandable on one level.

Rishi Sunak’s claim to Downing Street rests on being the grown up who took the car keys off a drunk... Sunak could level with the public and tell them that the Bank of England printed a tremendous amount of money for him to give away back when he was popular during lockdown... This caused inflation...

There are no free lunches and the last two years have been payback time...It’s been painful but the British public were generally very keen on lockdowns, furlough and “free” tests...

Everything that has happened since has been the inevitable consequence of policies that were wildly popular at the time and which the opposition parties wanted to do more of. 

This might be too bitter a pill for the public to swallow, but Sunak has tried everything else, so why not try telling the truth?

FULL ARTICLE [WITH EXPLANATORY GRAPHS] HERE