by Shortly after making it to the bottom two for the Tory leadership race in July, Liz Truss sent a thank-you message to her supporters with an oddly prescient typo. “I’ve been ready to hit the ground running since day one,” she wrote.
What was once just a fun typo turned out to be a well-kept promise. Even with Truss’ first two weeks in power overshadowed by the death of Queen Elizabeth II, the new regime has already managed to wreak a stunning array of disasters on the country and itself. The so-called “mini-budget” delivered by newly appointed Finance Minister Kwasi Kwarteng on September 23 was at the center of the chaos.
Kwarteng, a long-time Trus ally, is a free-market radical who, like Truss, believes unfettered economic growth will cure the UK’s legion of social ills. It may have come as little surprise when the free market, in turn, had a radically negative reaction to the Truss and Kwarteng proposals, which represented the biggest cuts to British taxation for half a century.
At a time when spiraling energy and food costs threaten to leave millions of Britons choosing between heating or food this winter, Kwarteng’s flagship economic policies included lifting the cap on bankers’ bonuses and scrapping the top 45 rate of income tax %, which would only benefit them. earning over $168,000 annually.
But the eye-watering tax cuts, combined with a promise to tackle rising energy bills through massive government borrowing, immediately sent markets into a tailspin as confidence in Britain’s finances evaporated. The pound fell to a record low against the dollar, British stocks and bonds plummeted and the Bank of England was forced to take emergency measures to avoid a potentially catastrophic collapse of pension funds, warning that there was a “substantial risk to the financial stability of United Kingdom’ had been created by the statement.
Members of Truss’s own party reacted with horror. “Liz is screwed,” a former Tory minister told Sky News after the mini-budget, adding that Tory MPs had already begun formally calling for a vote of no confidence in her leadership over fears she would “destroy the economy”. And even Tory heavyweights Michael Gove and Grant Shapps on Sunday denounced the plans as “instant”, adding that the cuts had “managed to alienate almost everyone, from a large section of the Tory parliamentary party caught off guard by its traders city. who will really benefit.”
Kwarteng also faced calls to resign over the turmoil – which grew louder when it was revealed he had attended a champagne reception attended by hedge fund managers who also allegedly benefited from the market chaos. But despite the uproar, it looked like for all the world Truss and Kwarteng would stick to their guns and continue with $50 billion in unfunded tax cuts.
On Sunday, Truss was asked during BBC interview if she was “absolutely committed to abolishing the 45 percent tax rate on the richest people in the country.” She said yes. By Monday morning, that ultimate commitment was completely dead. “We understood and listened” Kwarteng wrote in a tweet announcing that the tax cut would no longer go ahead.
The humiliating reversal was reportedly carried out to avoid an even more humiliating open rebellion by Tory lawmakers in the House of Commons who planned to block the tax cut. Losing such a sensitive vote so early in a government would be a disaster for Truss and its allies and their power.
But conservative lawmakers can already feel their party’s grip on the electorate slipping more broadly, with fears growing that they will face decimation in the next election. Shocking opinion polls published last week put the opposition Labor party 33 points ahead of the Tories – the party’s biggest lead in Britain since the 1990s, according to data analytics firm YouGov. Even more worrying for Tory lawmakers was the fact that the mammoth lead was partly explained by an exodus of people who had voted Conservative in the last general election in 2019, switching allegiance to Labour.
With the Conservative Party’s annual conference underway this week, Truss will have to find a way to restore her credibility within the party. So gloomy is the mood at the event that even a traditional karaoke event has been cancelled. Delegates arriving at the conference have even been abused by angry protesters outside the venue. But the message inside is arguably even more disturbing to the Tories. Over the weekend, veteran British pollster Sir John Curtice informed a fascinated audience that they were heading for electoral disaster, with Truss now as unpopular as Boris Johnson when he was ousted.
To say that he has only been Prime Minister for less than a month, that is a truly incredible achievement.
