Today’s gilt crisis isn’t like the mini-Budget. This time, there’s no easy way to fix it

How worried should we be?

What was once a slow-moving car crash is now turning into a high-speed pile-up.

The gilts market provide the raw material for mortgage advances just as the oil market does for petrol and diesel.

And when those markets are running hot, there is only one outcome — prices have to rise. Average two year fixed rates are now within three or four days’ rise of six per cent at the current rate of advance.

A breach of that mark looks inevitable given what’s been happening with gilts. It all feels like a rerun of last September.

Only it’s not. Last autumn’s crisis was a panic reaction to a sudden and unexpected U-turn on previous policy.

Markets were calmed relatively quickly by a change of cast in Downing Street and the “dullness dividend” that came with the arrival of Jeremy Hunt and Rishi Sunak. This time it is the flawed fundamentals of the British economy that is driving interest rates higher.

It is hard to see that yet another abrupt change in economic direction, let alone yet another new Chancellor or Prime Minister, will make any difference this time.

Almost all the indicators show the British economy “running hot” except for one — growth. That leaves the Bank in an impossible position — damned if it does and damned if it does not raise rates. But its mandate, the two per cent inflation target, is clear.

Rates will rise again next week and probably another time in August. Only later in the year will be see the scale of the damage that has caused. It may not be a pretty sight.