Liz Truss and Kwasi Kwarteng are the authors of the economic crisis now battering Britain and its people. They alone demanded the tax cutting mini-budget that has triggered the worst financial instability to threaten this country since 2008. Since they, and no one else, own this growing national disaster, they alone must take responsibility for it. New polls showing record Labour leads demonstrate the toxicity of their actions.
The prime minister and her chancellor are determined to impose a new economic orthodoxy on Britain. They are able to do so because Conservative party members have imposed a doctrinaire rightwing leadership on a country that has never voted for it, committed to a philosophy of small government that prioritises radical deregulation over greater fairness, regional equality and basic economic literacy. It is a policy profoundly out of touch with the values and priorities of the nation – just 19% of the public think the mini-budget is fair. But it is also out of harmony with the majority that voted for Brexit in 2016 and helped elect the Johnson government in 2019. Ms Truss and Mr Kwarteng give every impression of not caring. They seem to think they are clever and other people are stupid.
Ms Truss made it crystal clear on Thursday that she does not intend to change. This is in spite of a run on the pound, an implosion in the bond market, a sharp tightening of the mortgage market and a near-death threat to the pension funds on which ordinary people depend for their savings. All of these were foreseeable. But all have now happened, and may recur. To plough ahead with such policies is not merely cruel but also intensely arrogant.
For there is undoubtedly worse to come. Bloomberg calculated three days ago that UK markets have lost $500bn since Ms Truss became prime minister this month. Those numbers are rising. Sooner or later, the Bank of England will raise interest rates significantly. That will curb demand, not boost it. Fresh spending cuts – from a government that was elected saying that it was now time to invest properly in our future – are certain. So are benefit cuts for claimants and to pensions – the latter in direct breach of the 2019 manifesto. Ms Truss and Mr Kwarteng caused this problem, but the public is paying the price for it.
Although the prime minister and the chancellor say they are determined to overturn Treasury orthodoxy, they have quickly embraced its instinct to cut spending. This helps ensure that Britain’s recession will be longer and deeper. Wages will fall further behind inflation, and industrial disputes, not just in public services, are likely to grow. Energy prices may have been capped, but it will be a really tough winter for millions. Businesses will fold that would not otherwise have done.
Ms Truss and Mr Kwarteng are not just wrong but incompetent. They sacked the head of the Treasury. They undermined the Bank of England. They refused to submit their plans to the independent Office for Budget Responsibility forecasters. They announced no plan to bring the public finances back into balance. And, having spooked the markets already, they then spooked them again by hinting that even more unfunded tax cuts are on the way later.
This country has rarely needed a general election and a new government more urgently than it does today. Before that, however, the Conservative party itself needs to grasp the moral, economic, social and political seriousness of the course on to which it has been hijacked. Politically, Mr Kwarteng is now a dead man walking. He should go quickly. As prime minister, Ms Truss may hang on. But the unforgivable events of the past week mean that, for her too, the end is nigh and the die is surely cast.
