Liz Truss, Britain’s Conservative prime minister who replaced Boris Johnson, has an awful lot on her plate. Last Friday, she faced an extremely challenging situation in the wake of the heavily-criticized “mini-budget’ presented by her Chancellor of the Exchequer, Kwasi Kwarteng. Truss dismissed him and then faced mounting criticism that she should go too. “The prime minister has sacked the chancellor for agreeing with her,” commented one veteran BBC journalist.

 Labour and other opposition parties demanded predictably that a general election be held immediately in the face of the economic uncertainty generated by Kwarteng’s attempt to encourage growth by scrapping corporation taxes and lowering income tax for the rich – both without any financing. The resulting chaos created an unprecedented decrease in the value of the pound sterling against the US dollar and the euro and a sharp rise in interest rates.

 Another government minister said privately that Truss should not have sacked Kwarteng after he had spent just 38 days in office especially after insisting on Thursday – while attending the International Monetary Fund (IMF) meeting in Washington – that he wasn’t “going anywhere.” Even active supporters of Truss reacted negatively to her move, reinforcing the spreading view that her days are numbered.

 Back in early September, which now seems a very long time ago, Truss defeated Rishi Sunak, the former chancellor who competed with her to replace the scandal-prone Johnson and Brexiteer in Downing Street. But although the majority of Tory MPs backed Sunak, Truss was elected by party members of the party across the UK. “It’s checkmate,” said one Cabinet minister on Friday, albeit anonymously. “We’re screwed”.

 Truss has had to abandon her policy of cutting taxes and then hoping that growth comes automatically. Markets want to be sure that her government can provide economic certainty so market turmoil has produced unprecedented and extreme political uncertainty. The Economist magazine described her approach as “pantomime radicalism.” Investors were alarmed by the amount of borrowing required to pay for the cuts. Huge tax cuts were never going to pay for themselves.

 To be fair, Britain’s economic woes do not lie at the door of any one political party. Factors include Vladimir Putin’s ongoing war in Ukraine, rising energy costs, soaring food prices, inflation, increasing interest rates around the world and a strong US dollar. These are all global challenges which would be a nightmare for any government to manage.

 But Britain’s predicament is worse than in many other countries in large part because it is more dependent on gas. Inflation is already in double digits; some have predicted it may exceed 20% by 2023. Shortly before Truss won, the Resolution Foundation, a respected think tank, predicted that falls in real incomes would wipe out all pay growth since 2003.

 Jeremy Hunt, a former health secretary who was appointed to replace Kwarteng on Friday, conceded on Saturday that mistakes had been made. He added that Truss had won the leadership election to replace Johnson but tellingly admitted that “some people, including me, didn’t vote for the prime minister.” He added that many government departments, including health and defence (where Truss has vowed to increase spending), will face cuts. There were “difficult decisions” to come. Hunt faces an uncertain two weeks until he presents his own – hopefully - more sensible and realistic budget on October 31. And he was described as a “caretaker prime minister.”

 Another respected thinktank predicted that, historically, any efficiency savings are likely to come from public sector staff cuts and pay freezes. That is why Britons are generally not optimistic about their future economic situation.

 This Conservative government disarray is naturally good news for opposition parties, including Keir Starmer’s Labour, which was last in power in 2010. There was no historical precedent, he said over the weekend, for the current crisis, describing it as “grotesque chaos.”

 “Britain has faced financial crises before but the prime ministers and chancellors who wrestled with them all acted fast,” Starmer said in a powerful speech at Barnsley in Yorkshire. “When their policies ran against the rocks of reality, they took decisive action. But this lot, they didn’t just tank the British economy, they also clung on as they made the pound sink. Clung on as they took our pensions to the brink of collapse. Clung on as they pushed the mortgages and bills of the British public through the roof. All the pain our country faces now is down to them.”

 All this recent tumult has seen Labour, unsurprisingly, take a strong lead over the Conservatives in numerous polls. A survey published by YouGov last Thursday, found that 51% of people said they would vote Labour in a general election, while only 23% said Conservative, a gap of 28 points. As the Observer editorialized: “The country yearns for stability, good governance and solutions. It is clear it will fall to the Labour party to provide them – probably sooner than later. It had better be ready.”

 If Tory MPs agree to hold an election – as they must, according to constitutional law - it will be like turkeys voting for Christmas.

 

BY: IAN BLACK