Britain’s sketchy growth plan is scarier than its bond vigilantes

The expansive and costly economic policy of the new British Prime Minister Liz Truss reignited fears of « bond vigilantes ». But the turmoil in financial markets may have more to do with the regime’s uncertain return on investment than its heavy borrowing needs.

On Monday, the pound fell to a record low against the US dollar in overnight trading before rebounding slightly. Investors had already expected Ms Truss’s new government to spend north of £150bn, or $163bn, to freeze energy bills, but on Friday her Treasury chief, Kwasi Kwarteng, coupled with this with the most sweeping tax cuts since 1972, according to the Independent Institute for Tax Studies, as well as totemic measures such as removing a cap on bankers’ bonuses. The total package will cost £291billion, or 12.6% of gross domestic product, over the next five years, according to estimates from UBS economist Anna Titareva.