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I completely agree with your point about minimal credibility, but I think the markets do care about distribution, in that it was obvious to all (except Truss and team) that reducing the additional tax rate (and other giveaways) was very unlikely to produce much growth, but reducing VAT for instance, may. The markets also didn't like the lack of OBR forecasts and the promise of more unfunded tax cuts to come from Kwarteng.
My point is that just because we are currently running a deficit, doesn't mean we need to cut spending in order to fill the 'black hole'. As we found out in 2011, by cutting spending we actually prolonged the recession by a few years, as compared to the US and other EU countries that didn't implement austerity.
Lebowski-
As we found out in 2011, by cutting spending we actually prolonged the recession by a few years, as compared to the US and other EU countries that didn't implement austerity.
I don’t think the data bears this out. The UK had a deep initial contraction (due to our outsized reliance on the banking sector), but the rate of recovery equalled or exceeded European peers. Look at the UK vs France or (to a lesser extent) Germany on this chart.
NickCJ
The problem with that (as Truss found out), is that the market might disagree with you on what is likely to grow the economy.
Tories have minimal credibility right now and therefore minimal fiscal room to manoeuvre. Any government from the other side of the house will struggle with the fact that things that we might think are "good" in some sort of ethical sense might not grow aggregate GDP in the medium term (the market doesn't really care about the distribution).