Oct 06, 2023

The Fight over Britain’s Economy

A year ago, the short-lived premiership of Liz Truss was close to its sorry end. The British Conservative government is trapped by it—and already preparing for opposition.

Former British Prime Minister Liz Truss attends the Britain's Conservative Party's annual conference in Manchester, Britain, October 2, 2023.
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The British Conservatives, the United Kingdom’s “natural party of power”—a statement of historical fact as much as gloating—are preparing for opposition. The party is exhausted and fractious after more than 13 years in government. At their annual gathering in rainy Manchester earlier this week (likely the last before the next general election), all the main players were out on maneuvers, almost ignoring the man who is supposed to be occupying 10 Downing Street, Rishi Sunak.

While giving perfunctory praise to the prime minister, the two most likely contenders for the Tory throne, Suella Braverman and Kemi Badenoch, were setting out their stalls. The issues they assume that will deliver new life to the British right are variously immigration (a narrative around “small boats” rather than anything more profound), threatening to leave the European Convention on Human Rights (a familiar bête noire for the party faithful), the “culture wars” (with both being women and belonging to minority ethnic groups their views on race and gender are particularly watched) ... and relentlessly defending the lost cause that is Brexit.

Crashing the Economy

Yet in the most important area, the economy, the Conservatives are confused and divided. Which is where Liz Truss comes in. Remember her?

The psychology is at least as interesting as the politics. Most people with a standard dose of self-awareness would hide themselves away in perpetuity, having suffered the ignominy of being their country’s shortest-serving leader and having crashed the economy. Not Truss.

A brief recap: On October 20, 2022 from the steps of Number 10, she announced her resignation after merely 45 days. She had to stay on another four excruciating days while her party rubberstamped the choice of Sunak, the man they could have elected that summer, but chose not to, because he did not excite them enough. Instead, the largely elderly diehards that constitute the Conservative Party membership opted for Truss’ intoxicating promise of tax cuts and “growth.”

At the start of her painfully short tenure, Truss vowed to “tackle the issues that are holding Britain back.” Public enemy number one was the “economic establishment” and so within days she removed the permanent secretary at the Treasury, Tom Scholar, without apparent reason and to the consternation of officials across Whitehall.

She then side-lined the Office for Budgetary Responsibility, the organization whose job it is to monitor the financial conduct of government. The result was the most extraordinary budget in modern history, £45 billion (€52 billion) of unfunded tax cuts, particularly for the wealthy, and almost limitless borrowing. The markets were spooked, the pound crashed, and the Bank of England had to step in with an emergency bond-buying program “to restore market functioning.” It was later revealed that at one point the entire pensions system was on the verge of collapse.

Truss became the butt of jokes. A tabloid newspaper, the Daily Star, began a competition to see whether a mock-up of the prime minister, boasting a blonde wig, googly eyes, and a vivacious grin, would outlive a lettuce. The decaying vegetable, bought for 60p from a budget supermarket, was livestreamed. The lettuce triumphed.

Truss was already a dead woman walking by the time of the Conservative conference, which came 10 days after that budget. Desperate to buy time, she sacrificed her chancellor of the exchequer (finance minister) and good friend, Kwasi Kwarteng, while declaring that she was a “fighter and not a quitter.” Days later she quit.

Undead Trussonomics

After the briefest of lulls, Truss began her “fight back” in early summer on the speaker circuit, addressing adoring (if small) audiences at British right-wing think tanks in the UK and the United States, in an attempt to rehabilitate not just her reputation but also the so-called ideology that bears her name, Trussonomics.

In her various speeches, she insisted that her ideas were sound, inspirational even. The problem was rather that they had been implemented too quickly and resisted by those “uninterested in growth.” She called on Sunak to cut taxes, shrink welfare spending, and raise the retirement age. The government should embrace free market ideologies and ditch various climate commitments, she declared.

Surrounded by a small number of determined acolytes, the indefatigable ex-PM was the star billing at the Great British Growth Rally on the first full day of the Manchester conference. “Let’s stop taxing and banning things, and start producing and building things,” she declared. “Let’s make Britain grow again.”

In spite of all the mockery and with no signs of any self-awareness, Truss shows no signs of stopping. Next April, she plans to launch a book entitled, without irony, Ten Years to Save the West. It is said to be modelled on a series of essays she co-wrote in 2012 with other members of the next-generation Tories called “Britannia Unchained 2.0.”

Sunak, meanwhile, is pressing on with the difficult task of cleaning up her mess. He is haunted by his predecessors, not just Truss, not just Boris Johnson, who at least has had the good sense to lie low, by his standards, but also by Theresa May, who is out flogging her own book.

In his first year as prime minister, Sunak has established a reputation on financial markets and in foreign chancelleries of being a “grown up,” of calming fractured relationships at home and abroad, of re-establishing a sense of stability. Yet the closer the election looms, the more he is being told by advisers to develop greater ideological clarity.

He is trying to do so, but it does not come easy. He is more of a spreadsheet man, the former Goldman Sachs banker who identifies good and bad investments. Hence his controversial decision to scrap the second stage of a high-speed rail link that would have connected London with Manchester and the wider North (the part to Birmingham is slowing grinding on). The only piece of red meat he has given to the party faithful has been to water down commitments on fighting climate change that had until now cast Britain in a good light.

The Main Battleground

The unresolved battleground is the economy. Truss saw disruption as a good in itself; Sunak has reverted to the more traditional ground as the Conservatives as the trusted party of stability.

In order to have a fighting chance of winning the election, the Tories need to retain the “Red Wall,” former Labour Party voters in seats in the north and the Midlands, where public services have deteriorated the most and where investment continues to be desultory. They also want to appeal to the “Blue Wall,” the more affluent, in the south, who, it is said (though this remains to be proven), are attracted by tax cuts.

Truss’ legacy is to have removed the option of borrowing to fund both. The markets would go into freefall if the government were to try that again. Sunak faces an enviable set of choices, but his party does not know which way to turn. Longer term the Conservatives will have to go back to the drawing board on economics and ask themselves what they stand for. They would have more to time to do that in opposition.

John Kampfner is a regular contributor to The Guardian and The New European. His new book, In Search of Berlin, is published on October 5.

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