That drive down the A1 from Scotlandto my home in Yorkshire was unforgettable. I had been north for my mum’s 60th birthday and when I left her house on the morning of 16 September 1992 the interest rate was 10 per cent, sky-high when you think of today’s 1.75 per cent. Like many people then, mortgage payments were a huge drainon my income.
I still hadn’t crossed the River Tweedat Berwick when BBC Radio 4 droppeda bombshell: the interest rate had risento 12 per cent. Apparently the Bankof England was frantically buying £2bn of sterling every hour to tryand stave off a currency collapse,but to no avail.
My response to the news was a loud expletive (no children were present) and I distinctly recall emitting several more later on when I drove up from the depths of the Tyne Tunnel, the radio stopped crackling and I heard more breaking news. The rate had just been hikedto an eye-watering15 per cent.
This week it’s the 30th anniversary of that day, which became known as Black Wednesday, but this summer I remembered that journey for another reason. For by the time I reached Scotch Corner it had dawned on me there was no way the government could allow such a stupendous rise in interest rates. It would bankrupt millions and wreck the UK economy, and sure enough within 24 hours we were right back at 10 per cent. Similarly, that was my attitude to all those forecasts of energy bills almost doubling from October and tripling next year. I kept saying to people, “Look, calm down, it’s not going to happen. The government will have to do something!”
Shamefully, though, the government continued to stay silent, allowing people to become more and more despairing about their ability to stay warm this winter. Meanwhile the contenders for the Tory crown ripped each other apart like fighting mastiffs and Johnson, the titular prime minister, sulked out his remaining weeks in office, only getting off his backside to offer the bizarre advice that buying a new kettle would lower fuel bills.
So now we have the help that was always going to be in the pipelinebut cruelly and cynically kept under wraps until Liz Truss’s coronation to make her look like Good Queen Bess. Doing what Keir Starmer’s Labour had been demanding all along, freezing Ofgem’s energy price cap, at least removes many people’s worries about paying for heating and lighting in the short and medium term.
But the £130bn-plus cost is being met by borrowing rather than, as Labour wants, through a windfall tax being imposed on energy producers currently making an obscene £3bn profit per day. At the same time, the Truss government’s promise of huge inflation-causing tax cuts – which will mostly benefit the better-off – while reversing planned tax rises is terrifying many economists. The prospect so spooked investors in UK plc that the day after Truss became PM the pound suffered its biggest slide against the dollar since 2016.
With inflationalready rampantand government borrowing at unprecedented levels it seems we are putting ourselves at risk of a future Black Wednesday – amend with whatever day of the week that applies. But in the event of that happening, the colour should be Blue not Black. The next crisis must be painted in the livery of the Conservative party.