When Liz Truss became the Conservatives party leader we described her financial program as “voodoo economics” (lower taxes while increasing spending). The markets quickly came to the same conclusion and “In Liz we Truss” was shortlived.
Today, Prime Minister Liz Truss sacked the Chancellor of the Exchequer Kwasi Kwarteng. According to Sky News, the PM was forced to do so because the finance minister was not ready to step down.
Liz Truss likes to envision herself as a the 21st century Iron Lady. However, Margaret Thatcher said on October 10, 1980 at the Conservative Party Conference: “The Lady’s not for turning.” Liz Truss has turned more than once, most famously on Brexit: in 2016 she campaigned for Remain, with good reasons.
In the 2022 Conservatives leadership campaign, her economic and financial program distinguished her from her last stretch rival Rishi Sunak. The 172, 437 party members loved it, the markets however were less fond and, just after a few weeks, lost confidence in the new government to the point that the Bank of England was forced to intervene three times.
Kwasi Kwarteng still thought that his approach was the right one, and Liz Truss went with him until almost his last days. Only when she realized that she might be toppled, she turned around. In other words: the Chancellor of the Exchequer is just a scapegoat.
In the past, voters were frightened by the financial and economic policies of the Labour Party, last when the left-winger Jeremy Corbyn lost against Boris Johnson in the December 2019 election. Needlesss to say that Boris & the Brexiters had once again dished up all kinds of Brexit fairytales, but that’s another story.
With Brexit, the Boris Johnson and now the Liz Truss governments, the Tories have already lost an important part of their economic and financial credibility. The September 23 “mini-budget” or “Kwasi-budget” was just the last nail in the coffin. The Conservatives are no longer perceived as the party of fiscal discipline.
For ideological reasons, Liz Truss played with Britain’s financial stability to the point that the Bank of England had to intervene because markets were about to lose trust in the country’s finances in a moment of multiple crises, including high inflation, supply chain disruptions, Putin’s war against Ukraine, the Kremlin’s gas war, remaining Brexit and pandemic troubles, etc.
Either the lady becomes reasonable, adapts to reality, or she must be forced to step down. The sooner, the better.
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Photo on top: the official (gov.uk) portrait of Kwasi Kwarteng, dated January 13, 2021 when he was Secretary of State for Business, Energy and Industrial Strategy in Boris Johnson‘s government.
Article added on October 14, 2022 at 15:11 German time.
