Can we have Liz Truss back? Rachel's failure is not being reported.

 If anyone challenges Labour on their economic track record and you can hear Starmer smugly wheezing on about "Liz Truss crashed the economy".

At the time, the things which caused the left wing media to trash Liz, was the 30 year gilt (government long term borrowing) spiked to 4.85%. In part this was due to the LDI pension bubble which the Bank of England and other officials failed to spot.  Bad luck for Liz.

At the time 4.85% was cataclysmic to the economy so the reports went.  

Now where are we today?

A quick look at the markets  shows the Open price for British 30 Year Gilt UK30Y-GB is 5.473% and daily high of 5.495%

Isn't 5.4% higher than 4.85% ?

So aren't things worse now than under Liz Truss?

Yet we don't hear the left wing media harping on that Rachel crashed the economy. Where is the hysteria now when there should be genuine hysteria?

So borrowing rates are 0.6% higher right now than at the height of  the supposed Liz Truss financial crisis.

Sadly the government has failed to provide a nice breakdown of the percentage of government debt  made up of 30 year gilts.  However it appears that 20% of gilts are 30 year gilts although the percentage will fall during this parliament. This is because the debt is tied to RPI which looks pretty terrible. As inflation rises so does the cost of servicing the debt - a double whammy. The government needs more tax to service the debt just when the economy is struggling.

So 20% of £2.7 TRILLION.  We we are paying £2.6 BILLION more per year in interest for the same debt under Liz Truss. Of course debt has not been static....

The tears of the clown caused the blended gilt rate to spike to 4.8% from 4.5% causing an additional £44M in interest payments that day. It was 4.1% when they came to power.

The institutions around the world eg Chinese government, want higher interest payments from the UK as they dont have trust in the UK economy. We are looking more and more like a risky debt.

Government borrowing is up - they are hitting the credit card and splashing the cash. 

Nothing is being paid down. Quite the opposite.

The economy is faltering as businesses struggle with the National Insurance hike and massive inflation busting hike to the minimum wage. Business tax receipts will be down.

There's no sign that the government can reduce the size of the state - it will balloon.

Inflation is up. The CPI rose to 3.6% in June from 3.4% in May so gilts will cost more as a result.

The rich are fleeing sinking ship Britain in droves due to government policy. 

The top 1% pay 29% of all tax. So expect tax receipts from the rich to fall - increasing the burden on the middle classes.  The top 10% pay 60% of all tax. Expect that percentage to rise. 

If Labour proceed with wealth taxes then expect an exodus of the middle classes.

The national debt is £37,900 per person.  That's going to get worse.

The books are not balancing.  Tax receipts don't cover spending and havent done for decades.  You cant spend yourself out of this situation - unfortunately that's Labour's strategy.

We cannot afford to spend £443 BILLION each year more than are received in tax receipts. That's how we ended up with a circa £2.7 TRILLION debt pile.

If I personally was spending more than I was earning and I had run up huge debts, I wouldnt think "OK things are bad.  I need to buy a new car and an expensive holiday and that will sort things out".  I would be looking to take on a second job or make cut backs or whatever. Spending would not be the answer.

Unfortunately we are getting close to the cliff edge of a debt crisis.

Trump's Big Beautiful Bill will require USA bonds to be issued on a massive scale.  Given China buys much of the USA debt and Trump has not exactly been nice to the Chinese it does raise the question who will buy new USA debt if the Chinese are not takers. Japan has their own problems with debt and importantly increased costs to service the debt.  So could the USA and Japan be headed for recession?  We know that if America sneezes then the UK catches COVID. 

Who will want to buy future British debt - there's not an infinite pool of money out there to buy government debt.  So expect longer term debt interest rates to rise in order for someone to feel that buying British debt is a worthwhile risk. 

Starmer and Rachel thinks Liz is stupid. Do they also think we are stupid as well?