Graham Vanbergen: After Kwasi Kwarteng’s so-called ‘fiscal event’ or mini-budget as other commentators preferred to call it – Kwarteng decided to use his PhD in economic history and double down on the massive tax-cutting exercise he announced just days earlier – by announcing at the weekend that even more cuts were coming. By 7 am Monday morning, the markets decided he was wrong and that ‘Trussonomics’ was going to fail.

As I predicted last Friday – Sterling would crash and it has. The Singapore-on-Thames project is sinking before it gets off the ground.

As the FT reported at 0700 hrs – Sterling slid as much as 4.7 per cent against the dollar to $1.035, hitting a record low in Asian trading on Monday after UK chancellor Kwasi Kwarteng vowed to pursue more tax cuts.

Let’s not forget that this is an all-time record. It was 1985 when the last low was recorded at this level. Back then, at $1.070 the US Dollar strengthened as the tail-end of the oil crisis came about forcing down the value of Sterling. Twice in the next two decades, GBP recovered to break through the $2.00 barrier, but the dotcom crash and financial crisis both inflicted falls to just below $1.50.

Then came Brexit. Within a year, Sterling was trading at $1.20 and by April this year, traders and investors were rapidly losing confidence in the UK as both political and economic instability became the norm. Brexit couldn’t be solved. Three Prime Ministers can attest to that. The fourth in six years in now in the crosshairs of reality.

With Boris Johnson and his cabinet being evicted from office by his own party for their incompetence and his unacceptable behaviour, Truss ascended to the highest office in the land. As I said – her actions are a last desperate roll of the dice. Things are so bad – Truss cannot go to the electorate to seek a mandate from the public. The big problem with her ultra free market ideology is that even if it could work – it would take a lot longer than the two years she has available to her. In other words – there is no economic miracle on the way, and the markets know it.

Brexit has proven one thing though. In today’s world, having friends and not being isolated is far more important than attempting to be something you are not. The world’s greatest economy – America, is being tested by a challenger – China. And China knows it needs friends and allies – hence the One Belt initiative. The Middle East has dramatically changed its allegiances in the last few years. Africa is on the rise, India has just overtaken the UK in GDP rankings. Populists are creating havoc everywhere.

Britain is no longer a member of the EU and as we’ve all just found out (again) – the US/UK ‘special relationship’ means nothing. Britain has no global leading-edge technology and no manufacturing ability. It is reliant on trading partners.

The United Kingdom is facing real danger. First, the world economy and the order of it is changing very quickly as it adapts to the effects of the pandemic and Russia’s attack on Ukraine. Global supply chains and changes to the workforce (long Covid/early retirement/working from home/EU workers) along with severe inflationary pressures mean any country has to be politically and economically fit for the challenges ahead. Brexit has destabilised everything. But more to the point, the Tory party has made a string of disastrous decisions that has led directly to this point.

So, what next? From here, it’s more of the same. More instability, more turmoil, more shouting, finger-pointing and divisiveness. The economy will not get the kick-start that ‘Trussonomics’ promises.

The winter will be a proving ground for the economic policies of nearly thirteen years of the Tory reign – and the result won’t be pretty.