By Paul Krugman

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Liz Truss, who became Britain’s prime minister less than a month ago, may have set a political speed record. She certainly isn’t the first leader who has been forced to make a policy U-turn in the face of adverse market reactions. But announcing an economic program and then abandoning its central plank just 10 days later is something special.

And those of us on the center-left can, I think, be forgiven for feeling a bit of schadenfreude. Conservatives constantly warn that progressive policies will be punished by the “bond vigilantes,” who, they claim, will drive up interest rates at the prospect of any increase in public spending. Such warnings usually are proved wrong. In Britain, however, the bond vigilantes actually did make an appearance: Interest rates shot up after the Truss government announced its economic plans. But the market wasn’t reacting to excessive spending; it was reacting to irresponsible tax cuts.

That said, the simple story — Truss proposed policies that would increase the budget deficit and feed inflation, and markets reacted by pushing interest rates up and the pound down — misses much of what really happened. This was both more and less than a matter of dollars and cents (or, I guess, pounds and pence). It was instead largely about a government squandering its intellectual and moral credibility.

How big a tax cut did Truss propose? She and her officials announced their policy without a budget score, which contributed to the market’s loss of confidence. However, there are independent estimates; for example, the Resolution Foundation, a British think tank, estimated the Truss tax cuts at 146 billion pounds over the next five years, which would be around 1 percent of projected G.D.P. over the same period. That’s not trivial, but it’s also not huge. And the particular tax cut that was just abandoned, a reduction in the top tax rate, was only part of that total.

So why was the market reaction so fierce? Partly because Truss and Kwasi Kwarteng, the chancellor of the Exchequer, justified their moves with the much discredited claim that reducing top tax rates would provide a huge boost to economic growth. This raised doubts about their competence and, indeed, their connection to reality; it’s never good when economists at major banks declare that a country’s ruling party has become a doomsday cult.

Questions about Truss’s judgment were reinforced by the cluelessness of her timing. Right now ordinary Europeans, including Britons, are facing hard times, largely as an indirect consequence of Russia’s invasion of Ukraine. The Ukrainians, incredibly, seem to be winning the war; it doesn’t detract from their valor to say that Western weapons have played an important role in their success. So Vladimir Putin has tried to place pressure on the West by cutting off natural gas flows.