Toby Nangle reviews Liz Truss’s 92-page book, finding it surprisingly informative despite its brevity. The Financial Times Markets columnist argues the book starts poorly by claiming the Bank of England surprised the government with its quantitative tightening (QT) program on September 22, 2022. Nangle points out the BOE had announced the £80bn annual gilt sales plan months earlier, making the claim factually incorrect.
However, he praises Truss’s accurate explanation of the gilt crisis mechanics, particularly her understanding of pension funds' liability-driven investment (LDI) strategies. As rates rose, pension funds faced cash demands, forcing gilt sales that triggered a chain reaction. Nangle notes mortgage rate spikes stemmed from gilt market plumbing rather than fundamental UK economic weakness.
He laments that Truss failed to fact-check her central narrative about government ignorance of QT plans, despite her former chancellor Kwasi Kwarteng likely knowing about the BOE’s preparations. The review suggests a better story existed about systemic failures to warn against the mini-budget’s financial instability risks during global bond sell-offs and double-digit inflation.
Source: Financial Times Markets · Summarized by HeadlinesBriefing