The last few weeks will go down as being among the most chaotic in the UK's political history.

The appointment of Liz Truss as prime minister was meant to reassure British voters, the financial markets and Conservative MPs, all of who were getting nervous about the country's economic troubles.

So where did Truss go wrong?

She was elected leader by committing to challenge orthodox economic thinking. She promoted the trickle-down economic policies that were popular decades ago.

She persistently claimed that her economic approach was right for the country. She criticised the anti-growth coalition (meaning all those who warned her about the risks of unfunded tax cuts) and promised the party faithful that her strategy would be "growth, growth, growth”.

Truss chose Kwasi Kwarteng as her chancellor, only to throw him under the bus after just 38 days to save her premiership and hopefully regain the trust of all her three audiences. Jeremy Hunt has replaced Kwarteng and is reversing course in an attempt to steady the ship.

Kwarteng’s mini-budget had cut personal taxation for the rich, cancelled corporate tax increases that had been planned by the previous chancellor and reduced benefits for the most financially distressed Britons.

The markets, the Bank of England, the IMF and the great majority of British society did not like what they saw.

The pound fell drastically, interest yields on UK sovereign debt increased, and the Conservative Party is now trailing by 30 points behind the Labour Party.

The first lesson from this debacle is that financial markets do not buy into political rhetoric. They make their calculations and base their decisions solely on whether a country's economic policies will lead to the desired results.

In her disappointing press conference after the sacking of Kwarteng, Truss did not apologise for her mistakes and arrogantly implied that the markets were to be blamed for being unprepared for this radical change in direction.

Fiscal rectitude may cause unpleasantness in times of stress. But the warnings from financial markets and central banks must never be ignored when they raise red flags on unfunded tax cuts that threaten the good management of public finances.

As in most European countries, social inequality has broadened in the last few years, and all political parties have used populist strategies to court electoral support.

With most UK households badly affected by rising mortgage payments, high energy bills and rampant inflation, a massive support package was the right thing to introduce. But combining this with promises of tax cuts for the privileged in society – the wealthy and the corporations – is a sure way of convincing markets that the country has abandoned fiscal discipline.

A second lesson is that in a democracy, there is no guarantee that the way that a new prime minister is chosen is always the best for the country.

Conservative MPs, fearing a bloodbath in the next election, may well decide that party members chose the wrong person to lead the country a few short weeks ago.

What matters above all to MPs is that they get re-elected, even at the cost of causing more damage to the country's credibility.

The UK is already beginning to look more like Italy with its frequent change of prime ministers – by some accounts, Truss’s days are numbered.

Like all other European countries, the UK needs to steer away from populist strategies that promise unaffordable tax concessions.

It must also address the structural weaknesses that have made Europe a slow-growth continent because of its declines in productivity over the last few decades.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.