How Liz Truss plunged the UK to the brink of recession in just one month

Truss took over from Boris Johnson at the start of September and was immediately been plunged in at the deep end, with the death of Queen Elizabeth II. But the 10-day national period of mourning came to an end abruptly.

The move, which appeared to also violate public sending curbs, tore apart the orthodoxy established by the three Conservative prime ministers who went before her during 12 years in power that tried to emphasise fiscal prudence.

In total, it was the biggest tax-cutting package for 50 years.

Because it was not technically a full budget, the watchdog which is legally required to scrutinise such plans and provide new forecasts to reassure investors and economists was blocked from doing so.

Government bonds, known as gilts, had also seen a sell-off. And markets were predicting a sharp increase in interest rates, as the Bank of England stepped in to offset the inflationary impact of the plans.

Such was the chaos that both the government department Kwarteng runs and the independent Bank of England issued coordinated statements on Monday afternoon.

Meanwhile, it was rapidly becoming clear that the tremors in financial markets were being felt far beyond the City. By Tuesday, almost 300 mortgage deals had been taken off the market, as lenders reassessed the outlook for rates. Estate agents were reporting house purchase chains collapsing, as lenders and buyers pulled out.

He suggested the number of transactions was likely to decline sharply in the coming months, as potential buyers could no longer stretch to afford the home they hoped for. Sellers unable to wait would be forced to drop their prices.

A perfect storm is also brewing, as many two-year mortgage deals were secured around the time of the first Covid lockdown in the UK in March 2020 when interest rates dipped to their lowest point. When those deals expire, many may find themselves bitten by significantly higher interest rates.

As the crisis deepened, the vicious increase in yields, which had already gone up sharply in recent months, was wreaking havoc for pension funds.

Kwarteng and Truss meanwhile were nowhere to be seen, as the House of Commons is not sitting. The main opposition Labour party was having its annual party conference with activists and members, leaving government figures free to hide in their offices.

Grilled about the market chaos, she tried to focus on the generosity of the energy bailout, but appeared to flounder when challenged about the housing market, repeatedly pausing before replying.