Some praise at morning what they blame at night;
but always think the last opinion right.1
The last Conservative government hardly left office in a blaze of glory, but economically the picture was much brighter than it is today. Inflation was lower, longer-term interest rates were lower, as was unemployment, while economic growth was higher.
Rachel Reeves, in her emergency budget yesterday, looked to blame anyone but herself for the reversal of fortune, but she is the guilty woman.
On becoming Chancellor, her first step was to agree extravagant pay deals for public sector workers. These had been resisted by the Conservatives, at some political cost, but she immediately gave way to groups who had little public sympathy. The overpaid train drivers and the well-renumerated junior doctors were both rewarded with gold.
This gave an insight into her approach. Pay settlements would be generous. This matters because public sector pay accounts for about a third of all government expenditure, excluding benefits and interest, running at about £250 billion per annum. It indicated a looseness of the public finances, which the markets were unlikely to forget.
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