44 Days of Liz Truss
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ANDREW WONG: On October 14, the British tabloid newspaper Daily Star jokingly released a livestream of a £0.60 head of iceberg lettuce from Tesco to see if British Prime Minister Liz Truss would leave office before the lettuce went bad. Less than a week later, on October 20, the lettuce won.
Liz Truss resigned on the morning of October 20. In her mere 44 days as Prime Minister (the shortest of any Prime Minister in British history), Truss managed to crash the British economy, create yet another political crisis for Britain, and then promptly resign. For someone who became Prime Minister promising to “ride out the storm… rebuild our economy, and… become the modern brilliant Britain that I know we can be”, she truly missed the mark.
How did this happen?
Truss’ tenure as Prime Minister began under difficult circumstances. She came to No. 10 Downing Street after the tumultuous exit of Boris Johnson following the Chris Pincher and Partygate scandals. She inherited a series of domestic crises, including the cost-of-living crisis, labor unrest, and an overburdened NHS. Abroad, Truss faced the urgent European energy crisis, as well as Britain’s commitments to supporting Ukraine in the face of continuing Russian aggression.
In addition, on the third day of Truss’ premiership, the unthinkable happened. Queen Elizabeth II—Britain’s longest reigning monarch, who only two days prior had formally appointed Truss to the post of Prime Minister during an audience at Balmoral Castle—died at the age of 96. In the face of such calamity, Truss remained a sturdy stateswoman. She honored the late Queen, leading tributes and speaking at the State Funeral, whilst also ushering in the reign of a new King of England, Charles III. One could hope that Truss’ resolve to move Britain forwards, during the 10-day mourning period for the Queen, would be applied to solving Britain’s problems.
On September 18, Truss was finally ready to begin her premiership in earnest. The future looked bright, and Truss had big and bold policies. Skyrocketing energy prices were frozen to under £2000 per household, via a two-year Energy Price Guarantee announced on September 21. The rise in National Insurance premiums would be canceled. A radical new approach to economics, dubbed Trussonomics by the British media, would be pioneered by Truss and Chancellor of the Exchequer Kwasi Kwarteng. The two sought to reinvigorate Britain’s economy by “challenging Treasury orthodoxy” through sweeping tax cuts that subsequently created a high-growth economy.
That’s when the trouble began.
On September 23rd, Kwarteng unveiled the £161 billion “mini-budget,” a set of economic policies that would seek to bring growth back to the British economy. Major policies included a cut in the basic rate of income tax from 20% to 19%; the abolition of the 45% higher tax rate; stopping a planned hike of the corporation tax from 19% to 25%; and stopping the 1.25% rise of National Insurance premiums. Decades of policy orthodoxy on balancing the budget were thrown out in favor of a bold bet that increasing the national debt via tax cuts would ultimately pay for itself via long-term economic gains.
Curiously enough, Truss and Kwarteng had refused to let the Office for Budget Responsibility review the mini-budget prior to its release—they were supremely confident their radical economic proposition of increased government spending and massive tax cuts would kickstart the British economy back into action. Tory newspapers were similarly supportive. The Daily Mail’s front page proclaimed “At last, a real Tory budget.” The Daily Telegraph’s Allister Heath described on the front page how “this was the best budget I have ever heard a chancellor deliver, by a massive margin.” The stage was set. Would this radical plan finally turn around Britain’s economic fortunes?
No. In fact, the British economy did the exact opposite—it practically crashed.
Within days of the mini-budget release, British debt and unresolved questions over the proposal’s true economic impact roiled global financial markets. The pound sterling fell sharply against the US Dollar, to an all-time low of 1.03, as traders rushed to dump British currency and bonds. London forex traders would humorously nickname the pound “shitcoin.” British stocks tumbled. Even the IMF took the rare step of reprimanding the plan for being a “large and untargeted fiscal package” that “will likely increase inequality.” British bonds traded above a 5% yield, similar to that of an emerging market, and mortgage rates skyrocketed to a 14-year high.
Meanwhile, other crises continued to appear. A rail union strike paralyzed Britain. The Conservative Party nosedived in polling to barely above 20% approval, while their Labour Party rivals shot up to above 50% approval. Questions began to be raised about Truss’ ability to lead, first from Labour Party oppositions, but increasingly from her own Conservative Party.
Nothing Truss’ Government could do would stop Britain's economic tailspin. The 45% tax rate was reinstated on October 3. Kwarteng was sacked, and on October 14 senior Conservative politician Jeremy Hunt began as the new Chancellor. That same day, in a session of Parliament, Hunt announced the Government would no longer be pursuing the tax cuts of the mini-budget, effectively killing all of Truss’ economic plans. Truss was in attendance, sitting sheepishly behind Hunt, but did not speak.
With Truss’ economic plan dead, and Britain in crisis, it was only a matter of time before she was out of No. 10 Downing Street. For all the pressure, however, Truss refused to back down. At a heated Prime Minister’s Questions on October 19, Truss promised she was “prepared to front up, prepared to take the tough decisions,” and would not resign, proclaiming “I am a fighter and not a quitter.”
The next day, on October 20, she resigned.
Truss’ resignation is the latest in a year of political turmoil for Britain. On October 24, the Conservative party announced Rishi Sunak will be next at No. 10. He will be the third British prime minister of 2022, and will be confronted with both the economic crisis Truss tried to defeat and the additional economic problems she created. Britain is in a precarious position—it remains to be seen if Sunak is up to task to lead the nation in a better direction.
Andrew Wong is a staff writer for On The Record. He is a freshman in the School of Foreign Service studying International Politics. In his free time he enjoys swimming, hiking, and catching up on New Jersey politics.