Liz Truss's economic incompetence makes Black Wednesday Chancellor Norman Lamont look good – Alex Cole-Hamilton MSP

I was 15 when Black Wednesday happened. I remember the never-before-seen phenomenon of white overlayed text appearing on our TV screen flashing a public service announcement I didn’t fully understand: “Pound suspended from Exchange Rate Mechanism.”

Conservative Chancellor Norman Lamont, pictured in 1992, was blamed for the 'Black Wednesday' Sterling crisis (Picture: Jim James/PA)
Conservative Chancellor Norman Lamont, pictured in 1992, was blamed for the 'Black Wednesday' Sterling crisis (Picture: Jim James/PA)

As the UK economy collapsed, so too did the perception of the Conservative party as a custodian of sound fiscal management. I would be 33 before it got over the reputational damage caused that day.

This week is the closest we’ve come to that ​dark period in our history: another financial crisis triggered by government policy and once again, the Blues are entirely responsible .

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The impact of the Chancellor’s mini-budget has yet to be fully realised but the days immediately following it have been calamitous from almost every angle. There’s a global run on the pound which crashed to near parity with the dollar. This in turn triggered a hawkish statement from the Bank of England suggesting sharp interest rate rises in the near future.

That caused high street lenders to withdraw new mortgage products for the short term. The combination of these realities will cause households yet further pain in increased mortgage payments. That will further erode consumer confidence and spending power, hammering still further already fragile retail and hospitality sectors. The effects of this perfect storm will be felt most keenly by those already struggling to get by.

All this pain and for what? For a tax giveaway to the wealthiest citizens of our country. Much has been written about routes out of the cost-of-living crisis by commentators of every political stripe, but literally no one, in all that analysis was asking “who will think of the blessed millionaires?”

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It says a lot that after the super-rich, the only people left smiling on Friday were the city slickers who’d been suspiciously shorting the pound all week.

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In three years, we’ve had three Prime Ministers with three entirely different economic strategies. In a tough race, this could be the worst one yet. Let's not forget that this is a government which came to power as ​a guardian against what it described as a coalition of chaos.

Yet this level of economic competence would be enough to have market analysts screaming: “Come back Norman Lamont, all is forgiven!”

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Liz Truss is no stranger to U-turns and she should make one now. She must recall parliament and unpick the damage her Chancellor’s mini-budget has done in three particular ways:

Fund the energy price cap with a tax on the super-profits of energy producers. This would offset the need to borrow the £150 billion it will cost. It was that level of borrowing that sent the pound into freefall, whilst simultaneously placing an unethical financial burden on future generations. Restore the top rate of income tax and instead use any fiscal headroom to help struggling families. Reinstate plans to increase corporation tax, ensuring that industry giants pay their way and can’t exploit the tax system.

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It’s too soon to say how much further the economy has to fall, but Black Wednesday happened exactly 30 years ago and the parallels between it and what’s happening now are uncanny. Those who don’t learn from history are doomed to repeat it, and it’s the most vulnerable who’ll pay the price.

Alex Cole-Hamilton is Scottish Liberal Democrat MSP for Edinburgh Western