Sir Keir Starmer's claim that Liz Truss “crashed the UK economy” during her brief tenure in No.10 has come back to haunt him after Brexiteer Toby Young used his remarks to skewer Chancellor Rachel Reeves.
During the 2024 general election campaign, Sir Keir Starmer consistently cited the economic fallout from the mini-budget introduced by Kwasi Kwarteng, Ms Truss's Chancellor, as a reason to eject the Tories from office.
However, posting on X, Mr Young, director of the Free Speech Union think tank, pointed to what he saw as a key flaw in the argument.
He explained: Sir Keir Starmer's basis for claiming Liz Truss “crashed the economy” was the yields on 10-year UK gilts rose above 4% after the mini-budget.
“Today, they're trading at 4.25%.
“Does that mean Rachel Reeves has 'crashed the economy'?”
Government bonds typically measure economic stability, and rising yields reflect a sell-off by investors who demand higher returns to hold on to what they perceive as riskier debt.
At the time, Sir Keir pointed to the increase as evidence of a 'confidence crisis' instigated by the Truss administration's policies, which he argued made government borrowing costlier and raised inflation risk.
After the surge in bond yields, the Bank of England intervened to stabilize the bond market by purchasing long-dated gilts.
This extraordinary step, according to Sir Keir, underscored the severity of the situation and the government's failure to maintain economic stability.
He further argued that this intervention was effectively a taxpayer-funded bailout of sorts, highlighting the harm done to pension funds and other key financial entities holding gilts.
The spike in gilt yields led to higher interest rates across the board, affecting not only government borrowing costs but also mortgage rates for homeowners.
Many mortgage providers temporarily pulled fixed-rate mortgage offers, and new mortgage rates increased, putting significant financial pressure on households.
Sir Keir and other senior Labor figures seized on this to claim Ms Truss's policies had directly worsened the cost-of-living crisis for ordinary Britons.
Ms Truss, who lost her South-West Norfolk seat at the last general election, has vigorously defended her brief tenure and rejected claims that she was responsible for the turmoil following Mr Kwarteng's fiscal event.
She has argued that her economic policies were misunderstood or unfairly blamed for issues she sees resulting from broader economic challenges.
She further claimed much of the economic turbulence during her time in office stemmed from global factors.