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Chancellor Rachel Reeves always knew she would spend many days explaining her budget.
The reaction from those paying the bills for this near-record tax increase was always going to be harsh. For the Chancellor, her current political suffering is a price worth paying.
The budget is about the long term when it comes to the economy. It's not fast chess, to refer to Reeves' favorite pastime.
And in trying to revive the British economic model, the Chancellor's most useful asset is the fact that she has an overwhelming majority to credibly pass all of these policies into law.
This is one of the many differences from Liz Truss' mini budget and is sometimes underrated. In this 2022 Budget, markets were not only testing the economic credibility of a Prime Minister and Chancellor, but also their political credibility, to push a quite different set of economic policies through the Commons.
Look at France right now, which is trying to bring its public debt levels under control, but has a minority government made up of the third party, which is trying to adopt tough measures.
Markets do not have as much confidence in a minority government as they would in a government like the UK, which has a large majority.
Credibility
Two essential assets for a new chancellor (which eluded Kwasi Kwarteng) are the political credibility to adopt budgets and the financial credibility with the markets.
In the crucial government bond markets, which determine budgets but also impact mortgage and business loan rates, it's fair to say there is now more than a raised eyebrow.
While at the time of the budget speech there was no response, the publication of plans to increase government bond sales triggered a sharp rise in interest rates. In fact, the government is borrowing more than the markets predicted. The reaction is now notable, but remains orderly.
This is partly due to a market reassessment of the increased need for lending to the UK government and the expectation that the Bank of England, facing more post-budget inflationary pressures, will not cut interest rates further. so quickly.
Rates may not fall below 4% next year, as previously expected. The next words from the Bank of England, when it publishes its new inflation forecasts next week, will be closely watched.
Gigantic changes
The response was modest given the huge changes seen in Wednesday's Budget, with £76bn of new spending a year, half financed by tax and half by borrowing.
The chancellor's aides say the crucial fact is that the borrowing is primarily for large, long-term UK investments in major capital projects.
The plans increase investment by £105 billion compared to previous Conservative plans for significant cuts, leaving borrowing at the highest sustained level in half a century.
This could be much better for long-term economic growth, and not as inflationary. Obviously, it depends on how the money is spent.
The sums are large and suggest Joe Biden's plans in the United States, which included billions of dollars invested by the government in the economy.
Energy Secretary Ed Miliband was in the United States last week to visit top officials charged with disbursing record grants and loans under the $400 billion Energy Reduction Act. 'inflation. One lesson from the United States is that it takes time to build up a pipeline of wise government investments.
Even though the American private sector was immediately inspired by the government's massive announcements, it took one to two years for the state machine to restart.
The mammoth package in Wednesday's UK budget could be seen as a bet on the new government having the skills and judgment to launch high-productivity investments and thus deliver the growth that was missing from forecasts.
Of course, it is plausible that Biden's US strategy will not last a week if Donald Trump returns to the White House.
But unlike Joe Biden, the Prime Minister, his chancellor and his Energy Secretary have at least four years to try to obtain their results.
Long-term economics is why they're going to take the political blows now.
