Kwarteng’s fiscal pyrotechnics caused this mess – now we need some U-turns

Chancellor pitched mini-budget as way to avoid deep recession, but market's reaction has created risk of a deeper one

The good news is that there are still officials at the heart of UK decision-making who can recognise a financial crisis when it is staring them in the face. That's not saying much, admittedly, but at least the Bank of England, having fiddled nervously all week, has emerged from its bunker. It will buy long-dated government gilts to quell the riot in the market that is most crucial in setting the long-term cost of borrowing in the economy.

The bad news is that the Bank's hand was forced by the real danger of a calamity. Threadneedle Street does not use the phrase a material risk to financial stability" lightly. Dysfunction was feeding on itself. Pension schemes were becoming forced sellers of gilts to top up their short-term capital buffers. They could not handle the spectacular blow-out in yields since Kwasi Kwarteng's mini-budget last Friday. In a market where a daily move of a tenth of a percentage point is normally noteworthy, the yield on 30-year gilts had blown out from 3.6% to 5.1%. Yes, the Bank definitely had to act.