The Truss/Kwarteng 'Mini-Budget'

Chancellor Kwasi Kwarteng, under newly-installed Prime Minister Liz Truss, announced a package of sweeping unfunded tax cuts — including scrapping the 45p top rate of income tax, cutting the basic rate, reversing a planned National Insurance rise, and a large energy price guarantee — without an accompanying independent forecast from the Office for Budget Responsibility.

The market reaction was severe and unusually fast for UK fiscal policy. UK government bond (gilt) yields saw one of the sharpest single-day rises on record, and the pound fell to its lowest ever level against the dollar, briefly touching close to parity. The turmoil in the gilt market threatened to trigger a cascading crisis among pension funds using liability-driven investment (LDI) strategies, forcing the Bank of England to launch an emergency bond-buying intervention to stabilise the market.

Kwarteng was sacked as Chancellor less than a month later. Truss resigned on 20 October 2022, having served just 49 days — the shortest tenure of any UK Prime Minister in history.