Dan Snow's History Hit - The Budget: Britain's Financial Crisis Explained

Episode Date: November 17, 2022

Rising interest, cost of living crisis, energy prices at an all-time high- is Britain's precarious financial situation the fault of policymakers or global forces? On the day the chancellor reveals the Autumn budget Dan and Dr Charles Read, economic historian and fellow at the University of Cambridge make sense of how Britain got here. They break down gilts, bonds and interest rates, how voters swing toward extreme parties in the wake of the financial crisis, and what lessons Kwasi Kwarteng should have taken from the Whig party's mistakes during the Great Potato Famine in the 1840s, as he made his disastrous mini-budget.Dr Charles Read's new books are called 'The Great Famine in Ireland and British Financial Crisis' and 'The Carry Trade, the Banking School and British Financial Crises since 1825'This episode was produced by James Hickmann and edited by Dougal Patmore.If you'd like to learn more, we have hundreds of history documentaries, ad-free podcasts and audiobooks at History Hit - subscribe to History Hit today!Download History Hit app from the Google Play store.Download History Hit app from the Apple Store.

This is History's Heroes. People with purpose, brave ideas, and the courage to stand alone. Including a pioneering surgeon who rebuilt the shattered faces of soldiers in the First World War. You know, he would look at these men and he would say, don't worry, Sonny, you'll have as good a face as any of us when I'm done with you. Join me, Alex von Tunzelman, for History's Heroes. Subscribe to History's Heroes wherever you get your podcasts. Hi everybody, welcome to Dan Snow's History. On Thursday the 17th of November 2022,

the Chancellor of the Exchequer, the UK's Finance Minister, Jeremy Hunt, is going to hold up his briefcase outside number 11 Downing Street, where he lives next door to the Prime Minister. Then he's going to head over to the House of Commons, a short walk away, but he'll probably drive, and he'll announce the budget. He will be trying to steady the ship after the most catastrophic financial mishandling possibly in UK history. It saw the collapse of Liz Truss's government in the space of weeks. It was historic folks, a historic balls up. So Jeremy Holt's got a lot to do here. He's got to reassure the markets, he's got to protect the British people from the worst

effects of commodity price rises and in his mind he's going to be trying to give the Conservatives at least a vague chance of winning the next general election. It's fascinating stuff. And it's of interest to people, not just in the UK. So to all my non-UK friends and listeners, you might want to listen to this one. Because on this podcast, I'm going to talk about the government being embroiled in a financial crisis. They'd attempted to cut taxes whilst paying for subsidies to offset soaring commodity prices. The market lost confidence. The Bank of England had to step in to ward off a full-scale

financial crisis. The government slashed spending as a result. There was austerity and hundreds of thousands of UK residents died and were driven to the very extremities. I am of course talking not about 2022, I'm talking about the great crisis of 1847. In the midst of the potato famine, which affected Ireland in particular terribly, the price of imported food was so high that the government could not meet its commitment to subsidise it. It had to stop subsidising that imported food and as a result many people, particularly in Ireland, were thrown into a condition of appalling immiseration and hundreds of thousands of people died. The British government simply did not have the financial firepower, even at the height of the 19th century, to both cut taxes and increase its spending to protect its own citizens. My guest on the podcast wrote a book about this very conveniently. He then sent it to Kwasi Kwarteng, the Chancellor

of the Exchequer, weeks before Kwasi Kwarteng announced his mini-budget. And in this book, it was all the things the Whig government of the 1840s did wrong. And then two weeks later, government of the 1840s did wrong. And then two weeks later, Kwasi Kwarteng did the same thing. He announced a gigantic spending plan to protect British people from gas price rises, but he also announced huge tax cuts. Unfunded borrowing, folks. Why didn't he listen to the advice of my guest? Well, you can listen to his advice and when you're finance minister, you can act on it. We're going back to look over 200 years of history, not just that great crisis of 1847,

but financial crisis ever since. My guest is Charles Reid. He's an economic historian. He's a post-doctoral fellow at the Faculty of History at the University of Cambridge. Later this year, I mean, seems a bit coincidental to me.

I mean, it's the best possible circumstance for this book to be published, if not for the rest of us. He's got a book called Calming the Storms. It's about British financial crises since 1825. Charles Reid's got all the answers. And as ever, when we look back at these crises, they illuminate the present. In fact, the other day, someone was talking to me about the podcast I made about Russia's failures in World War I and how that has cast so much light on what's going on there at the moment. I agree. As you know, I love these podcasts that go back into our history to help the present make sense. And Charles Reid certainly does that today. So enjoy.

T-minus 10. Atomic bombs dropped on Hiroshima. God save the king. No black-white unity till there is first and black unity. Never to go to war with one another again. And liftoff. And the shuttle has cleared the tower. Charles, thank you very much for coming on the podcast. Thank you very much for having me. Charles, are we in the middle of a

financial crisis at the moment? Well, it certainly looks like we're heading towards one. Partly, there's a lot of financial stress in the world because interest rates have been going up, but there was a particular event which has caused interest rates to go up particularly fast in Britain, which was the mini-budget of 23rd of September 2022. So the mini-budget had a big planned spending binge plus a set of unfunded tax cuts, and this caused the government bond market to panic. Guilt yields shot up, and this put huge strain on the financial system. So much so that the Bank of England had to step in to bail out pension funds by switching

quantitative easing back on. So if the Bank of England hadn't switched quantitative easing back on, yes, there would have been quite a severe financial crisis in Britain. So we were very, very close to one. Okay, so I'm going to break this down because we've got you here and we've all got stupid questions to ask. I am going to be that conduit, the stupid question asker. Gilts and bonds, they basically are the rate of interest which the government can borrow at. Is that correct? And also, that's different from the rate of interest set by the Bank of England. Can you do that very basic thing and explain to me and the listeners why we've got two different interest rates we're talking about?

The interest rate that the government can borrow at is set by what's called the gilts market, which is basically a form of government bond. That's set by the market at what the government can borrow at. The Bank of England's minimum lending rate is the minimum lending rate it's willing to lend money to commercial banks. And that normally they are quite close together, the two are quite close together. But at the moment they've separated, the rate the Government can borrow at is much higher than the Bank of England is willing to lend to banks. This is because British government debt is no longer regarded as a safe asset because of the

amount of borrowing planned by the British government. I thought, Charles, the big lesson from COVID is, huh, isn't that cool? We seem to have entered a very modern, capable form of government that means we can borrow as much money as we like forever and never have to worry about it. So what's going on now? That's a very interesting question. Well, certainly it was possible over the past decade to print a lot of money without ending up with inflation because of a lack of demand. The world's banking system was so much damaged after the global financial crisis that it was no longer very good at moving money from savers who are putting money into the banking system in the form of their savings to businesses which wanted to

invest it, or there was a shortage of the businesses that wanted to invest it or consumers who wanted to borrow it to do things such as buy houses. COVID made that situation much worse in that lots of people just wanted to stay at home during the lockdowns. They didn't want to go out and spend money. They weren't going out to do lots of shopping. Businesses thought in the future there wouldn't be as much demand as they were previously planning before COVID. And so they didn't invest either. And so we ended up in the situation where governments could borrow and spend huge amounts of money without this generating inflation. However, when the lockdowns came to an end, when the vaccines were rolled out

across much of the world and people went back to normal. They caught up on all the shopping that they'd missed during the COVID period. This meant that there was a sudden huge amount of pent-up demand which was unleashed and there were supply bottlenecks. Firstly, that China would continue to have lockdowns And so China wasn't manufacturing as much as it was in the past. In addition, this year, Russia invaded Ukraine. And that also increased the amount of supply bottlenecks. Europe and the West imposed sanctions on energy exports from Russia, leading to shortages of natural gas and oil around the rest of the world. In addition, the amount of food exports from Ukraine fell dramatically. And that meant much higher energy and food prices across the world. And this does

generate a lot of inflation. In addition, there is increasing evidence that the pandemic has made a lot of people very ill in the long term. Lots of people have long COVID and have fallen out of workforce. Many people have decided to retire early rather than rejoin the workforce. And that there's also a shortage of workers in many Western countries. The whole result of this is that we're now seeing a lot more inflationary pressure now than we have at any point in the last decade. In addition to that, though, an increasing number of commentators and economists have argued that there's also been policy mistakes made so many central banks kept interest rates too low too long in addition they kept quantitative easing going far too long so to explain quantitative easing

to those listeners who aren't familiar with term or might have heard the term but don't quite know what it is. This is a form of creating new money, a form of what you might call money printing, apart from this is all electronic money these days, rather than literally printing banknotes and minting coins like in the past. But central banks kept doing this surprisingly late. So the Bank of England kept quantitative easing going until last December. By last December, the inflation rate was several times higher than the Bank of England's target of 2%. In addition, interest rates didn't start rising until early this year, when inflation was much higher than the Bank of England's target. And so keeping interest rates too low too long and keeping quantitative easing going too late has also contributed to basically too much money in the world chasing too few goods.

So we avoided and we may be heading towards a financial crisis at the moment. In the last 200 years of British history are these regular occurrences? Are there too many for you to list or are they relatively sparse? Britain has a very interesting banking history because at a period of just over a century in which it didn't have any systemic banking crises. This was between the 1860s and the 1960s. And it's even referenced to in Mary Poppins, a popular children's Disney movie. So there's a scene in it where there is a run on a British bank, the Fidelity Fiduciary Bank in London. And the point of that scene is it's meant to be as fantastical, as surreal as the other scenes in the film, such as jumping into a chalk pavement picture and cavorting with

racehorses, or having a tea party on the ceiling with Mary Poppins' uncle. It's meant to be as fantastical as something which you wouldn't actually see in London. So for a century, but before that period, in the mid-19th century, it had a series of very severe financial crises, 1825, 1837, 1847, 1857, and 1866. And since then, for 100 years or so, there were no major systemic banking crises until you get to the 1970s, when they start coming back, most notably the secondary banking crisis of 1973 to 1975, and then the global financial crisis of 2008. And then possibly, who knows, we might be heading into one now again. So there's a big historical question, which I've been doing a lot of research on recently about why did these crises go away in the late 19th century and then why did

they come back at the end of the 20th century and into the 21st century? Well I'm glad you've been doing the research because do they tell us why and do they have a same or similar causes? So they all have similar causes in that they're all caused by monetary policy shocks. Now, you might wonder, what is a monetary policy shock? Well, essentially, that is when interest rates go up very fast and by a lot. So if you have a mortgage and you pay interest on your mortgage, if it gradually rises slowly over time, over a period of several years, it's possible to make changes to perhaps do some overtime or cut expenditure elsewhere in order to afford those extra payments. But if mortgage rates triple overnight, which is essentially what has happened over the past few months in Britain,

that's much harder for people, for households and for businesses to adapt to. And many have financial problems. They can't pay back the loans. And if the bank has too many people who can't pay back the loans, the bank is in trouble and the banking system by extension might be in trouble. And essentially, it's when interest rates go up too quickly, too sharply. This is when you get financial crises in British history. That is true in the 19th century, in 1847, in 1857, in 1866, and also in the 1970s and the 2008 crisis as well. And what we've seen with the mini-budget of 2022 is a very almost reckless disregard for the idea that a monetary policy shock would be a bad thing. If anything, the rhetoric of the people around the then-Chancellor of the Exchequer, Krasi Korteng, was that this would be a good thing. interest rates would force businesses which were unproductive or not growing very fast to close down and the resources could be allocated to fast-growing businesses. However, the point is,

is the damage banking crises do, that financial panics do, that having the pension funds of the country almost go bust, far outweighs the benefit from reallocating in a dramatic fashion the resources from underperforming businesses to better performing businesses. And why is it so important to avoid a financial crisis? Why are they so bad? That's a very good question. There's been a lot of research on that topic over the last decade or so since the global financial crisis. They are bad for many reasons. Firstly, economic, in that a financial crisis or a downturn which is accompanied by a systemic banking crisis where the banking system collapses and the payment system

stops working, this is much worse than a normal cyclical downturn in the economy. So across countries, and there's been many economists who've done work on this, if you look across countries, downturns with banking crises are deeper, longer, and have much lower recoveries than ordinary downturns. In an ordinary downturn, such as the early 1990s in Britain, the economy shrinks, but then it catches up with its original growth rate. So the economy doesn't permanently lose output, it only loses output in the short term. But after a banking crisis, you permanently lose output. You don't go back to the same trend line. You go back to a trend line

which is much lower or a less deep one, i.e. growth slows down. So it's really bad in the economic sense. And the question is, why is that? Well, if the banking system is damaged, that's rather like having a heart attack. So if banks pump savings into investment and investment in businesses and building houses and things, if that causes growth, well, if the banking system has a heart attack like it does in a banking crisis or a financial crisis, it's not very good at reallocating those savings into investment. So that's why it's so bad economically. But it also has lots of other bad effects. that's why it's so bad economically, but it also has lots of other bad effects. So politically, there's evidence that a normal downturn does not change the political spectrum in Britain.

So a very good example of this is the early 1990s. Yes, the Conservatives fell in popularity in the early 1990s, and they became more popular. But essentially, Tony Blair more or less was following the same sort of policies that John Major's government was following. There was no shift in the political spectrum. However, after banking crises, you get a big increase in voting for extreme parties. And across countries, it's about 30% increase in voting for extreme parties. That's quite easy to see after the global financial crisis, whether that's a surge of support for Euroscepticism in Britain, whether that's a surge in support for Donald Trump in America, whether that's increased support for hard right or far right figures in continental Europe, such as Le Pen in France. And as we can see, the hard white has just run

an election in Italy. That's quite easy to see. Whereas there's not much evidence that there was an increase in voting for extreme parties in Britain in the 1990s in comparison. So politically, it's bad. It causes extreme politics. It causes politics of division to grow. It causes more tribalism in politics.

But it also has terrible effects in other ways, in less quantitative ways on people's well-being. I mean, there's even research which says that ordinary people's well-being decreases sharply after a banking crisis in a way that it doesn't after an ordinary economic downturn. So while it might be impossible to avoid economic downturns, if it's possible to avoid financial crises, it's possible to avoid a lot of other negative effects that we want to avoid as far as possible. You listened to Dan Snow's history, talking about financial crises. More coming up, sadly. Did you know that some of literature's greatest characters were real people? It's so fascinating, isn't it, that some of the Three Musketeers are also based on real soldiers. That Sir Walter Raleigh wasn't all that he's been cracked up to be. Chemist, poet, scholar,

historian, courtier. He could have been great in all these different things. And that if your name is Dudley, you better watch your back. For the Tudors, each one of them took something from the Dudleys, either by working with a member of the Dudley family or of course by having one executed. I'm Professor Susanna Lipscomb and I'm learning all this and much more bringing you Not Just the Tudors twice a week, every week. Subscribe now to Not Just the Tudors

from History Hit wherever you get your podcasts. This is History's Heroes. People with purpose, brave ideas, and the courage to stand alone. Including a pioneering surgeon who rebuilt the shattered faces of soldiers in the First World War. You know, he would look at these men and he would say, don't worry, Sonny, you'll have as good a face as any of us when I'm done with you. Join me, Alex von Tunzelman, for History's Heroes. Subscribe to History's Heroes wherever you get your podcasts.

tell me in the british case pick an example from the 19th or the 1970s or 2008 or today to what extent are these financial crises the result of misguided national government policy and to what extent that we are caught up in a perfect storm and we have national solutions to gigantic international crises which are insufficient. So that's a very interesting question in that there's been a debate going on about to what extent is the government responsible for the problems in Britain's financial markets? To what extent was it the mini-budget's fault or was this global forces which the government couldn't do anything about? Or was this global forces which the government couldn't do anything about? There are global forces that you can't do much about, but governments do choose policies which means that countries are either better protected from those international forces or whether they choose to expose their countries to those international forces. So to give an example, during the 1970s, oil prices tripled or even quadrupled at one point in the early 1970s due to the OPEC embargo on the

West. And this hit countries across the West who were importers of oil because the price of oil was going up. However, Germany, which imports a lot of energy because it doesn't have its own domestic oil reserves in any great amount, inflation never hit over 10% in that decade at all in the 1970s. In Britain, on the other hand, inflation hit over 25% in 1975. And that's seen by many economic historians as the bad policy. So policymakers across the world in the early 70s had this background of financial markets and energy markets, which were going to cause big problems. But it's the choice of policymakers whether you compound those problems or whether you adopt policies which helps protect

countries and vulnerable individuals from what's going on in the financial markets. And what the mini-budget of 2022 did is it chose almost precisely the wrong policies to do at the time. So yes, there was going to be a monetary policy shock this year, interest rates have been rising. And the Bank of England has been realising that it's left interest rates too low at the end of last year, and it needs to increase them faster in order to get inflation down to its target of 2%. But the government chose policies which made that monetary policy shock much worse. It decided to go for unfunded tax cuts.

It decided to increase borrowing by a huge amount in order to subsidise energy for consumers and businesses. And what that does is that when the financial markets are less sure that the government's going to be able to pay this money back, or if they think that this is going to increase Britain's trade deficit, because the huge increase in natural gas prices, and quite a bit of that natural gas is imported, is going to increase the trade deficit. And if people think the pound is going to fall because of that, to buy British government debt, investors want a bigger interest rate to make the bigger risk worthwhile their time. So the mini-budget precisely did the wrong thing in that it made that monetary policy shock worse. It made market interest rates go up and it's very likely to have forced the Bank of England to have to increase interest rates faster and more

sharply in the months to come. What historical parallels have you got that have helped you develop this critique, but also can suggest perhaps directions that we might travel in? This is History's Heroes. People with purpose, brave ideas and the courage to stand alone. Including a pioneering surgeon who rebuilt the shattered faces of soldiers in the First World War. You know, he would look at these men and he would say, don't worry, Sonny, you'll have as good a face as any of us when I'm done with you. Join me, Alex von Tunzelman, for History's Heroes. Subscribe to History's Heroes wherever you get your podcasts.

So many people compare the 2022 mini-budget to the Dash for Growth budget of 1972. So to give some background, this was when unemployment was about to hit one million for the first time since the 1940s. The Heath government went into panic and wanted to go for growth in order to reduce unemployment, to prevent a recession. And so they cut taxes and increased borrowing. And this triggered an increase in inflation, it triggered an increase in interest rates and eventually it forced the next government to go to the IMF in 1976 and ask for a bailout. So some people have compared the mini budget of 2022 to the Dash for Growth budget of 1972 but I think there's actually a much better comparison in the budget of 1847. So the context of that one was that Europe and Britain had a shortage of commodities,

just like now where the shortage is in both food and energy. Back then, there were harvest failures across Europe, most notably of potatoes. There was a sharp rise in food prices. And the British Isles as a whole had one of the biggest food deficits in Europe. And so the government faced an issue of what to do about inflation, what to do about food shortages, and also how to protect the poor and most vulnerable against those food shortages. What redistributive policies could they introduce in order to deal with those food shortages? Most notably in Ireland, where 3 million people, at that point out of the population of about 8 million, relied on potatoes not only as food, but also as and in 1846 virtually the entire crop was wiped

out along with their livelihoods and so the budget of 1847 just like now dealing with the mini budget of 2022 attempted to deal with the sharp rises in energy bills that people are facing. The budget of 1847 was dealing with how to finance famine relief in Ireland. repeal of the corn laws and cutting other tariffs to very low levels to follow a form of free trade ideology that some people might compare to trustonomics maybe. And the result was very similar. There was an instantaneous market panic. Government bond yields, the cost of government borrowing sharply rose. The week after the 1847 budget was the worst week ever since the 1690s, since the national debt was established in Britain. That was the worst week for government debt in over centuries. There was also a sterling crisis. So in 2022, that meant the pound sharply dropped in value. In 1847, because the pound was attached to the gold standard,

that meant there was a run on the Bank of England's bullion reserves. And indeed, the Bank of England was forced to bear out markets. So in 2022, that meant quantitative easing to prevent the pension funds from going bust. In 1847, the government failed to raise all the money it needed to pay for everything it wanted to in the 1847 budget, and the Bank of England actually had to lend the money to the government instead. The other comparison is within weeks, both governments were forced to U-turn on their policies. In 1847, that meant the government had to promise Parliament and promise markets it wasn't going to spend as much money on Irish famine relief as it was planning to. And that had

terrible consequences. That's why so many people died in the Irish famine, the collapse in central government spending of financing relief efforts. And that decision killed hundreds of thousands of people, quite literally. In 2022, that meant that most of the budget had to be ditched. So many of the tax cuts, such as getting rid of the 45p rate, that policy was U-turned on. Cutting the basic rate of tax by one penny was got rid of. There's going to be a lot less support for energy bills for both firms and consumers than previously planned. And the 1847 and 2022 are very similar in that they caused U-turns within weeks of the budget being announced. Moreover, they both led in the case of the 1847 budget and looking like it's going to lead to for the 2022 budget, new areas of austerity.

And because the two budgets unsettled financial markets, it's made investors trust the British government less, and they're not willing to lend money to the British government at such cheap rates as they were previously willing to. And so this reduces the fiscal room for manoeuvre of the governments and means you ended up with more austerity because of the budget, because of the government's announcement it was going to borrow so much money than you would have otherwise. And it's very clear that that was true in 1847 and that's also true in 2022. So that's grim. The lesson from history there is grim. It means spending less, austerity, people suffering. What can we learn from history to avoid these snarl-ups in the first place? So I've written two books coming out later this year about financial

crises in Britain. The first one was the financial crisis of 1847, and this catastrophic impact that has on Irish famine relief efforts in the 1840s. That book's The Great Famine in Ireland and Britain's Financial Crisis. And the second book is about financial crises and how to avoid them in Britain over the past two centuries, which will come out in December. And I wrote a history and policy paper. I was asked by the History and Policy Project, which is an attempt to encourage academics to write up their research in ways that policy makers can read and easily digest lessons from history to make sure that mistakes made in the past aren't repeated. I was asked by the History and Policy Project to write a paper about what's the lessons from your research about financial crises

for the present. So I think the first big lesson is avoid monetary policy shocks, or if anything, government should try to lessen them, not make them worse. And you can see that occurring in 1847, you can see that occurring in 1972, you can see that occurring in 2022. But big fiscal expansions, big decisions to increase government spending at the wrong moment drove interest rates up or is currently driving interest rates up higher and faster than they would otherwise be. And that causes problems for consumers, for businesses and for banks which have lent them money. Yes, interest rates need to go up. But if you try to do it slowly, it's better than doing it very quickly. So first thing is don't make monetary policy shocks worse.

And that's the big mistake of the mini budget of 2022, that the government ignored advice saying don't do that. They caused the monetary policy shock to get worse and this is why people who are refinancing their mortgages will find that their mortgage rates will have risen three or four times since they last took out their mortgage. So that's the first big lesson. The second one is that it's important the governments take the idea that markets limit their fiscal room for manoeuvre seriously. So yes, governments do have a bit of wiggle room. And I think that the British government in the 2010s had a bit more wiggle room in the early 2010s than it thought it had and could have borrowed a little bit more money and austerity could have been a little bit less severe in the 2010s. But there is a limit to that.

So the idea that the government can borrow hundreds of billions of pounds without consequence, if that was ever true, it's certainly not true anymore. Interest rates are far too high, credit conditions are tightening far more. And it's important to understand how the room for manoeuvre of governments is limited by financial markets. That doesn't mean they have no room for manoeuvre in that if the British government had taken action a few months ago in order to reassure financial markets of its plans, it would have been able to borrow more. It would have been able to be more generous to help people in the months and years to come with their energy bills. But because investors and financial markets lost confidence with the government because of the mini budget in September, that means they're not as willing to lend as much money to the government. And that means that conditions will be grim in the months to come. And that had very serious effects in the past as well.

In 1847, that made the money supply available to the government to pay for the Irish famine relief disappear, and that killed hundreds of thousands of people. And there is research saying austerity in the 2010s did also kill hundreds of thousands of people or increase excess mortality, or it meant that life expectancy wasn't as high as it would have been otherwise. And so I think it is quite possible that soaring energy bills in the next few years could have an impact on life expectancy and increase the mortality rate in Britain, if there's less help, either through the benefit

system or through lower energy prices available. Also, should we buckle up? 1847 onwards, I think there were five changes of Prime Minister in the following 10 years. Does political instability obviously follow this kind of financial upheaval? Yes. So the toxic myth is financial chaos and political chaos at the same time. Because if financial markets don't know who's going to be in power, they won't know whether they want to lend to the government because they don't know who the government is. That was true during the Irish famine, where the general election of 1847 ended up in the situation where the government was slightly short of the majority. And rather like Theresa May in 2017, that government was forced to rely

on the support of Irish MPs and other groups in Parliament in order to get its legislation through. That meant the government had a lot less room for manoeuvre. It couldn't raise taxes when it wanted to because it struggled by majorities and parliaments to raise taxes during a recession. And I think financial markets are very worried about political stability at the moment in that it's easy to forget that before the Brexit referendum, Britain tended to have governments which were quite long lasting. Thatcher was in power in 11 and a half years. John Major was in power for just under seven years. Tony Blair was in power for 10 years. Gordon Brown was just three

years, but in some ways that was just an extension of Tony Blair's government. Cameron was in power six years and could have been in power much longer if he hadn't lost the referendum. But since then, we had three years of Theresa May, three years of Boris Johnson. And there's a worry that Britain might end up rather like Italy or Australia, where it's more common to have very short-lasting governments and a high turnover in prime ministers. And let's look at the Italian example. That's not helped their economy. Italy has some of the highest cost of borrowing in Europe for the government. And so investors don't necessarily trust the Italian government as much as they do other European countries. And it looks like Britain's going to be the next country in that position in Europe. Well, that's a cheerful place to end it. Thank you very much, Charles. That was a astonishing rampage through 200 years of financial crises. I'm really, really grateful for you coming on and particularly answering my stupid questions and making it very clear. Tell everyone what your

new book is called. So my new book is The Great Famine in Ireland and Britain's Financial Crisis. This is the book that Kwasi Kwarteng should have read before the mini-budget of 2022, seeing he made exactly the same mistakes in the mini-budget of 2022 as the Whig government did in 1847. And the mistakes made by the Whig government in the budget of 1847 had huge negative consequences. Not only did it raise mortality during the Irish famine by hundreds of thousands of people, it also damaged the union, it caused support for Irish nationalism and separatism to increase, which caused Ireland to gain independence and the union to begin to break up. We now live in a new age of austerity because investors no longer trust the government to

borrow as much money as they once did. And again, unfortunately, I have to say that there are more negative consequences ahead. But the point is, there are good lessons from history about the mistakes made, and the negative consequences could have been avoided. So do read about the last time a British government made such a dramatic mistake in a budget, such as they did in this one, in my new book. did in this one in my new book. I'm training my daughter to become Chancellor of Exchequer and I'm going to read her your book to make sure that she finally in 2040 something, 50 something, makes sure that we don't make those same mistakes. We should listen to historians. Thank you very much Charles Rood for coming on. Thank you very much. This is History's Heroes. People with purpose, brave ideas, and the courage to stand alone. Including a pioneering surgeon who rebuilt the shattered faces of soldiers in the First World War. You know, he would look at these men and he would say,

don't worry, Sonny, you'll have as good a face as any of us when I'm done with you. Join me, Alex von Tunzelman, for History's Heroes. Subscribe to History's Heroes wherever you get your podcasts.