Liz Truss’ tumultuous tenure as prime minister still casts a shadow over the UK one year after her appointment, with the reverberations of her ill-fated economic policies and political instability still being felt. Truss’ promise to transform Britain through unfunded tax cuts resulted in a sinking pound, soaring interest rates, and chaos in the bond markets. The Bank of England was forced to intervene to support failing pension funds. Truss was quickly forced to abandon her economic program and resigned less than four weeks later, becoming the shortest-serving prime minister in UK history.
While some factions within the Conservative Party continue to advocate for Truss’ brand of free market economics, her brief time in office is widely seen as a period of farce and incompetence. The legacy of her premiership has tarnished Britain’s reputation globally, with annual Foreign Direct Investment (FDI) into the UK falling behind France last year. The country’s economic growth has also been lackluster, ranking as the second-worst performing G7 economy post-COVID.
Major financial and professional services firms, as well as US investment banks, cite the instability during Truss’ tenure as a key factor deterring investment in the UK. A recent survey by BritishAmericanBusiness and Bain and Co. revealed that US business confidence in Britain has declined for three consecutive years, with political instability being a significant concern. Investors are calling for a stable political environment and business-friendly policies from the UK government.
Despite the negative impact on the economy, the pound’s unexpectedly strong performance since Truss left office suggests that foreign direct investors may have compensated with other forms of inward flows. However, the British economy’s competitiveness on the global stage has been hampered by Truss’ disastrous premiership, Brexit, political uncertainty, and a sense of misplaced British exceptionalism.
The Conservative Party has suffered a significant blow to public trust in their ability to manage the economy, as shown by polling from Ipsos. With an election approaching next year, the Labour Party, currently 18 points ahead in the polls, has capitalized on the distrust towards the Conservatives. Labour’s shadow Cabinet minister believes that Truss played a crucial role in allowing them to gain public trust on economic matters.
Moderate Tory MPs and supporters of Rishi Sunak, Truss’ successor, fear that the damage caused by her 49-day premiership could cost the party the next general election. Despite the economy showing signs of improvement, the party is unlikely to receive much credit due to the events of last year. Nevertheless, some economists and Truss defenders argue that the past 12 months have been viewed too negatively. They highlight bond yields reaching similar levels to the Truss era and the prediction that inflation would help reduce the UK’s debt pile, as evidence that Truss’ policies were not entirely misguided.
Truss herself is now writing a book that aides say will be more like a manifesto than an autobiography. She is also scheduled to give a keynote speech on the economy later this month. However, many Tory MPs still grappling with the fallout from her tenure hope for a period of silence.
More detail via POLITICO here… ( Image via POLITICO )