Liz Truss will be replaced in ten days and from a Tory perspective it would be best to forget. Let the healing process begin. But whoever succeeds as UK prime minister faces enormous challenges.
Mind game. It’s October 31st, the Tories have managed, despite the traditional elbow room thinking, to agree a successor to the doomed failure Liz Truss. So what’s in store for prime minister number three this year?
The future prime minister should not be envied for this work, for this ruined heritage. “Whoever wins loses” is the very apt title of the American “Bloomberg” news portal. An overview of the biggest challenges facing the new prime minister.
The legacy of “Trussonomics”. economic collapse
A “leap into the unknown” is ahead, ING bank interest rate strategist Antoine Bouvet told the New York Times (NYT). That is perhaps putting it mildly, given the desolate state in which Truss will hand over Downing Street to his successor; inflation is now over ten percent, food prices haven’t risen this fast in four decades, wages aren’t keeping up. At the same time, interest rates are rising. A clean broom looks different.
Truss, who at least has his place in the history books as the Prime Minister for the shortest term, promised a solution to all this. It was called a tax cut. And massive. As the NYT notes, at its core, his “trusonomics” was very reminiscent of the so-called leapfrog economics of the 1980s, which was “based on the belief that tax cuts were fair to the rich and would lead to investment and economic growth.” common growth for all will benefit.”
The problem of the question. When your former finance minister, Kwasi Kwarteng, presented the relevant £45 billion plans, he did not answer the most important question. How should the loans be financed? The lack of independent oversight was also punished by the markets. sterling fell to record lows and government bond yields rose, forcing the central bank to step in to save pension funds. In short, fiscal credibility melted away along with Truss’ modest approval ratings. “It takes years to build a reputation and a day to destroy it,” Bouvet told the NYT. Bringing something resembling stability to the British economy will undoubtedly be the most pressing and challenging project of Truss’ legacy. Kwarteng’s successor, Jeremy Hunt, did what had to be done, but in doing so sealed his boss’s downfall once and for all; he retreated with all his might.
However, the economy is still far from recovering from the Truss shock. Hunt plans to present a “medium-term financial plan” soon. Accordingly, he wants to present his results on Halloween. In the end, the Minister of Finance will independently check the whole thing this time. But even then, according to the NYT, the construction site remains open. Experts are wondering how Hunt intends to push through the “difficult” spending cuts he previously announced. after all, there is hardly any freedom in ministries that have already been cut. This, in turn, raises fears that the austerity measures implemented during the 2008 financial crisis are just around the corner.
Given the appalling food prices, selling it will probably require nothing less than a rhetorical masterpiece from the new prime minister. As economist Chada told the American newspaper, the first thing to do is to completely reverse the failure of unfunded tax cuts and create a budget support plan. That could mean Hunt ultimately has more say in the matter than Truss’ successor. “Unless Britain finds a way forward economically, its global role will be in jeopardy,” agrees Frances Burwell of the Atlantic Council, a US think tank.
At the same time, analysts predict significantly lower growth for the British economy in the coming year, which in turn limits the central bank’s room to maneuver and, conversely, halts urgently needed investment. Yes, this year the third prime minister will have to do the hardest job of economic cleansing. Rarely have the lights on Downing Street shone brighter, and rarely have the starting conditions for a new head of government been less favorable. “Fear, he [Truss’] Repeating mistakes will not only fuel the ambition of the next president […] limit,” says Ben Judah of the Atlantic Council.
Courtesy of Prime Minister Tories
The truss leaves a pile of rubble, and not just economically. His party is also unlikely to recover from the failure of his historic short term in office. They have already ruled out that the conservatives will give up their right, due to the lack of democratic legitimacy, and will instead hold new elections. For good reason. According to the polls, Labor is currently winning while the Tories are losing hundreds of seats.
And so, one thing must be clear: Truss’s successor will not (once again) be prime minister by the grace of the people. If the Tories do not quickly agree on a party leader, the party’s roughly 170,000 members will have to appoint a new prime minister, but that would be in line with the will of less than 0.4 per cent of the voting population. It was also this elite minority (typically wealthier and older than the average Briton) who put Trussy into office in the first place, the Conversation news network notes. Nevertheless, not much can be expected from the conservatives, “but the bad thinking of the party leadership is striking,” the magazine notes. The past serves the party “not as a useful guide for the future, but as a destination.” In other words, one expects little and is still disappointed. Whoever the MPs or the party base will represent this time will have to mend the joints of a deeply divided country with even less support.
According to the American AP news agency, many factions of Tories, starting from strict supporters of Brexit to centrist “One Nation Tories”, are already at each other’s throats. “No one has a plan on how to act. It’s a daily hand-to-hand fight,” Conservative MP Simon Hoare told the BBC on Thursday ahead of Truce’s resignation. So, reconciling the divided party will likely be the new Prime Minister’s second Herculean task. Logically, it would be much easier if the deputies united behind the candidate.
But the new head of the government will not only have to calm down the situation internally. The political chaos and parliamentary deadlocks that make day-to-day business more difficult after Brexit have damaged the kingdom’s credibility beyond national borders. “Britain may be an island, but it is not alone. Europe and the UK need each other, and they need the focus and political will to build an effective relationship,” concludes the Atlantic Council.
Sources: “New York Times”; “Associated Press”; “Atlantic Council”; “The Conversation”