Truss may be focussed on growth, but it's Labour's poll lead that is increasing
Liz Truss might have made a promise to get Britain moving again but what she didn’t clarify is in which direction. And just three weeks into the job, with a casino style ‘fiscal event’ that her chancellor didn’t even put to the Office for Budget Responsibility for fear of stark facts interfering with wishful thinking and utter self-delusion, the country’s economy went into free fall.
Within hours of Kwasi Kwarteng’s ‘mini-Budget’, the pound tanked, the UK’s pension funds were brought to the brink, the financial markets spiraled into chaos, mortgages flew off the scale, and with the Bank of England preparing to print money for a bail out, a stinging rebuke reminiscent of previous currency crises, from the fiscal watchdog, the IMF, elevated Britain from being just one European nation struggling to cope with a challenging economic outlook, to being a financial basket case and a global laughing stock.
Life comes at you fast in politics but with calls already being made – from within her own party – for the new prime minister and her supremely clever but apparently witless chancellor to step aside. This was an act of unnecessary self-harm by the new Tory leader that no one, bar her, could quite understand.
And in some ill-thought-out, economically illiterate, and un-costed attempt to go for growth by cutting the highest rate of tax for the country’s richest, the only inevitable outcome was to make the rich, richer, and the rest of us poorer.
As a result, any financial or indeed, political, gains from the government’s much heralded support package to put a cap on energy prices – a multibillion pound bill which will ultimately be footed by us all anyway – were wiped out and more, by the eyewatering consequence of the chancellor’s other, less trailed but much more politically significant, plans around cutting tax for those that least need it.
Financial markets don’t like surprises and as they struggled to catch up with any rationale behind the tax cuts, the conclusion was already being seen on the City’s flashing screens. And while millions poured into the coffers of speculative hedge fund managers who capitalized on the market chaos by shorting on the pound, ordinary mortals watched in terror as interest rates soared and their mortgage rates flew through the roof.
A pending housing crisis caused by mortgage defaults and inevitable rent rises, could now easily be added to the multi-faceted crises that the government is already wrestling with in energy, cost of living, climate, and a war in Europe.
During her campaign to be leader, Truss made clear her disdain for what she saw as an economic orthodoxy which she said had had failed to achieve growth for the country. She knew better than the experts in the City and big brains in the Treasury, and her uncompromising Thatcher cosplay made her sound radical, gutsy, and willing to take on the markets.
Tory members like that. It echoes “taking back control”. But last week proved to be just an act of sheer stupidity by an arrogant and uncompromising Tory prime minister who believed she knows best, and she could best the market.
Cutting taxes for the rich and targeting benefits for the poor, is always an inevitable consequence when you view the economy through a prism of the highly privileged. If you can’t take from the rich, you take from the poor, and when you wrap the injustice of it all in a false narrative that talks of the politics of envy or the feckless poor, then ideologically you could argue, which I am sure Truss does, that you are on the right side of policy.
But even die in the wool Tories are finding this unpalatable. There is no post leadership election bounce for Truss and on the eve of her party conference, her first as leader, and with four opinion polls predicting Labour to be the next government, by some margin, Truss may have been on a mission for growth but stimulating support for Labour might not have been the increase she was looking for.
And as the Chancellor quickly rewrote his speech on the back of a breakneck U-turn on his disastrous tax policy, Truss proved that unlike her hero, this is one lady that is thankfully, on this occasion, for turning.
This article first appeared in the Sunday Post