Tory shadow chancellor says sorry for Liz Truss mini-Budget,
but what responsibility lies with the BOE for overreaction in a knee jerk increase in interest rates?

The question of whether the current Tory shadow chancellor should apologize for Liz Truss’s 2022 “mini budget” is a matter of political debate. The budget, which included unfunded tax cuts and sparked market turmoil, was widely seen as a major misstep that contributed to a collapse in investor confidence, a spike in borrowing costs, and a rapid depreciation of the pound. While the shadow chancellor was not in office at the time, some argue that senior Conservatives should acknowledge the damage caused by the policies pursued under Truss’s leadership, given their lasting economic impact.

As for the Bank of England’s role, it faced an extremely difficult situation. The mini-budget’s unfunded fiscal stimulus risked exacerbating inflation, which was already high due to global factors like energy prices and supply chain disruptions. The Bank responded aggressively with interest rate hikes to stabilize the pound and curb inflation. Some critics argue that the Bank may have overcorrected, but others contend that its actions were necessary to restore credibility after the market panic triggered by the budget.

Ultimately, the Truss budget was the primary destabilizing factor, and the Bank of England’s response—though arguably severe—was a reaction, maybe OVER reaction, to that shock rather than an independent policy failure. The Tory shadow chancellor may not need to *apologise* personally, but acknowledging the broader party’s misjudgements could be seen as a step toward restoring economic trust. Meanwhile, the Bank’s decisions remain contentious but were made under extraordinary pressure, they may have panicked!