Kwasi Kwarteng’s growth gamble is a risk worth taking

New Chancellor Kwasi Kwarteng’s first ‘fiscal event’ was always going to be quite provocative and exciting. But in the end it went quite a lot further than expected. Far from pulling back when faced with the practicalities of being in office, Truss’s new administration did everything it had signalled, controversial or not, then threw in some even more controversial policies just for good measure.

The centrepiece is the huge energy price package. The government estimates that this will cost £60 billion over the first six months. But since the policy involves capping wholesale prices and government subsidies to make up the difference, that £60 billion estimate is entirely subject to the inscrutable vagaries of international energy markets and the progression of the Russo-Ukraine War. If the Ukrainians were to win very rapidly and the Russians offer reparations in the form of cheap gas, energy prices could plummet. If the Russians find some way to counter-attack and continental European plans for energy rationing prove unsuccessful, prices could sky-rocket even from where they are now.