When Liz Truss was running to lead Britain this summer, an aide predicted her first weeks in office would be turbulent. But few were drawn to the scale of sound and fury—at least the Truss itself.
In just six weeks, the prime minister’s liberal economic policies have led to a financial crisis, emergency central bank intervention, several U-turns and the dismissal of his Treasury chief.
Truss now faces an insurgency within the governing Conservative Party that hangs his leadership by a thread. Conservative MP Robert Halfon growled on Sunday that the past few weeks had brought “one horror story after another”.
“The government has looked like moderate jihadists and treated the whole country like laboratory rats on which ultra, ultra-free-market experiments are conducted,” he told Sky News.
Not that the party was not warned. During the summer competition to lead the Conservatives, Truss called himself a disruptor who would challenge economic “conservatives”.
She promised she would cut taxes and red tape and propel Britain’s sluggish economy to grow.
Her rival, former Treasury chief Rishi Sunak, argued that immediate tax cuts would be reckless amid the economic shock from the coronavirus pandemic and the war in Ukraine.
The 172,000 Conservative Party members – predominantly older and affluent – prefer a boosterish vision of the Truss. She won 57% of the members’ votes to become the governing party’s leader on 5 September.
The following day, Queen Elizabeth II was appointed prime minister in one of the monarch’s final acts before his death on 8 September.
Truss’s first days in office were overshadowed by a period of national mourning for the Queen.
Then on 23 September, Treasury chief Quasi Quarteng announced the economic plan he and Truss had drawn up.
It included 45 billion pounds ($50 billion) in tax cuts – including a reduction in income tax for the highest earners – without assessing how the government would pay for them.
Truss was doing what she and her allies said they would do. Mark Littlewood, the head of the liberal think-tank, predicted there would be “fireworks” during the summer as the new prime minister pushed for economic recovery at an “absolutely breakneck pace”.
Still, the scale of the announcement took financial markets and political experts by surprise. Tim Bell said, “Many of us, erroneously, hoped that he would go on to win the leadership contest after winning the primaries like many presidents.” Professor of Politics at the Queen Mary University of London. “But she didn’t. She was saying exactly what she said.”
The pound fell to a record low against the US dollar and increased government borrowing costs. The Bank of England was forced to buy government bonds and take steps to prevent the financial crisis from spreading to the broader economy.
The central bank also warned that interest rates would have to rise faster than expected to curb inflation by around 10%, leaving millions of homeowners facing considerable increases in mortgage payments.
Jill Rutter, a senior fellow at the Institute for a Government think tank, said Truss and Quarteng made a series of “unforeseen errors” with their economic package.
“He should not have made his contempt for economic institutions so clear,” she said. “I think they could have listened to the advice. And I think one thing they got very wrong was announcing a portion of the package, tax cuts … without the spending side of the equation.”
As the adverse reaction grew, the truce began to drop parts of the package to reassure its party and the markets. The tax cuts for the top earners were lifted in the middle of the Conservative Party’s annual convention in early October as the party rebelled.
On Friday, Truss fired Quarteng and replaced his longtime friend and colleague with Jeremy Hunt, who served as health secretary and foreign secretary in the Conservative governments of David Cameron and Theresa May.
Under party rules, the truce is protected from a leadership challenge for one year. Still, some conservative legislators believe it may be forced to resign if the party can agree on a successor.
Defeated rival Sunak, House of Commons leader Penny Mordaunt and popular Defense Secretary Ben Wallace are among the names mentioned as possible replacements. Johnson, who remains a legislator, still has supporters.
Junior Treasury Minister Andrew Griffith argued on Sunday that the truce should be given a chance to attempt to restore order.
“This is a time when we need stability,” he told Sky News.
“The house people are tearing their hair out at the level of uncertainty. What they want to see is that an efficient government is working.”
