Why Britain’s economy doesn’t work

The great virtue of markets is that they are coldly actuarial and politically indifferent. Win them over and you can get a lot done. Just ask Javier Milei, President of Argentina. Milei has defied his left-wing critics and the distrust engendered by a lengthy history of defaults to slash public spending, rebuild reserves and tackle inflation.

Fall out of favour and it is a different story. Bond markets are no longer buying Labour Chancellor Rachel Reeves’ proclamations that she is ‘going for growth’ with her plans for a tax-financed state expansion and debt-financed investment splurge which she laid out in her first Budget.

Markets fear her plans will add to inflation, further damage growth, and drive public borrowing even higher. This is why 10-year gilt rates, a key benchmark upon which borrowing costs across the economy are set, have risen from 4 per cent in mid-October ahead of the Budget, climbing to 4.9