October’s budget will be a giveaway, incorporating new expenditures and tax reliefs accompanied by protestations of caution. The justification is the need to respond to a once-off adverse event, in this case the surge in inflation sparked by rising energy prices. Since there can be no domestic remedies to an imported inflation, the strategy is to borrow more and hope for the best. The policy needs to be sustainable, not just to the financial markets, but also to the public, which ought to fear a policy reversal if the wheels come off.

The modern State sometimes uses budgetary resources, including tax revenues and borrowing, in order to act like a giant insurance company. When misfortune strikes either a specific group in society, say with flooding or a crop failure, or everyone with recession or imported inflation hurting real incomes, the State is impelled to take action.