Liz Truss did not think that spending cuts would be a major part of her agenda. She and her first chancellor, Kwasi Kwarteng, were confident that markets, having lent Britain billions of pounds to cover the cost of the lockdowns, would be more than happy to do the same to transform the economy. Their argument was, as it turned out, calamitously wrong. The miscalculation cost Kwarteng his job and the Prime Minister her power.

Truss’s new Chancellor, Jeremy Hunt, has dismantled almost all of her plans. ‘Trussonomics’ has been snuffed out. This temporarily calmed the markets. But abandoning tax cuts – as painful as it was – will soon prove to have been the easier part of the job. The real test comes on 31 October, when Hunt must reveal exactly how he plans to get public spending under control.

With Hunt rolling back almost all of the mini-Budget, and suspending cuts to the basic rate of tax ‘indefinitely’, the Treasury estimates it has found £32 billion worth of revenue to help account for the £60-70 billion black hole the OBR is expected to announce at the end of the month. No small sum. But since Truss’s original plan – to borrow billions more without so much as a polite request to those who would be lending it – has blown up, it is understood that Hunt feels compelled to account for every extra penny being spent.

If calmer markets mean the cost of government borrowing continues to fall (five-year and ten-year gilt yields dropped below 4 per cent after Hunt’s latest announcement), that will help to tackle the deficit by reducing what the government has to pay to service its debt. But that’s not guaranteed, leaving upwards of £30 billion still to be found. To put this in perspective, in 2010 David Cameron and George Osborne planned £24 billion worth of spending cuts for their first three years in office – billions less than what Hunt will be looking for. With mere weeks to take stock of departmental budgets, it is near-impossible to imagine any scenario that will appease both the markets and MPs.

Hunt wants to see the ratio of debt-to-GDP – currently 96.6 per cent – falling in the next few years. This, he believes, is the best indicator of fiscal credibility. Hunt’s task would have been difficult even without the mini-Budget upset: the UK’s deficit was already forecast to be £100 billion this fiscal year due to pandemic hangover spending, while little to no economic growth is forecast for years to come. Hunt says he’s willing to put every departmental budget on the chopping board: health, defence, the lot.

This may not be politically feasible. ‘The party won’t wear spending cuts,’ one minister tells me. Without those cuts, the pathways become extremely limited. ‘They could ask the markets politely this time if they can borrow some more,’ the minister half-jests, ‘but I think the markets have already spoken on that.’

Truss is not helped by her leadership campaign promises, which included raising defence spending to 2.5 per cent of GDP by 2026 and 3 per cent by 2030. Her Defence Secretary, Ben Wallace, is hinting he will resign if Hunt reneges on this promise, while his deputy James Heappey has publicly said he’d go. It’s a difficult battle for the Chancellor to win, especially as Russia’s war against Ukraine rages on – but cancelling defence rises might prove easier than trying to trim the NHS at a time when in England there are a record seven million people on its waiting list.

As speculation grows that Hunt has the triple lock on state pensions in his sights (Truss continues to insist it will stay), it’s clear Tory MPs have no stomach for any kind of cut. ‘The triple lock is deeply unfair,’ another MP admits to me. ‘We all know it should go. But now is not the time.’ These kinds of cuts would be difficult to push through at the best of times: such changes require political capital and support. The Prime Minister and the Chancellor have neither.

For now, Hunt has calmed the markets. He’s likely to prioritise keeping things that way – even if that means spooking MPs over his upcoming Halloween Budget.