Liz Truss is powerless, humiliated, referred to as a “ghost” prime minister, and compared negatively to a head of lettuce this week in London. Tuesday, the British prime minister was scrambling to regain control after her economic ideas were rejected by a Treasury chief she was compelled to install to prevent a financial market disaster.
Truss is in office for the time being due mostly to the fact that her Conservative Party is divided on how to oust her.
In an effort to maintain business as usual, Truss convened a Cabinet meeting on Tuesday and met with lawmakers from rival Conservative factions, arguing that keeping her in the position would provide stability despite having to abandon nearly the entire platform on which she was elected party leader only six weeks ago.
Truss acknowledged on Monday that “mistakes were made” but said she would continue to lead the Conservatives into the next national election.
Liz Truss, the prime minister of the United Kingdom, looks down during a press conference in the Downing Street Briefing Room in central London on October 14, 2022, following the dismissal of the finance minister in reaction to a budget that caused panic on the financial markets. DANIEL LEAL/POOL/AFP/Getty
Few people believe this. Truss is doomed, according to Britain’s lively, political press, which is uncommonly unanimous in its judgment. The tabloid supporting the Conservatives, The Sun, referred to her as a “ghost PM” and stated, “For the sake of the country, we cannot continue like this.”
The Guardian, which leans to the left, compared the Conservatives to a mutinous ship’s crew, stating, “Truss has not left her party, but it looks to have left her.”
After The Economist stated that Truss’ time in charge of the government was “roughly the shelf life of a head of lettuce” prior to the September 23 “mini-budget” that set the markets ablaze, the tabloid Daily Star set up a livestream featuring a photo of the prime minister next to an iceberg with a blonde wig, eyes, and a mouth. It wonders, “Can Liz Truss outlast this lettuce?” which is rapidly turning brown after five days.
A screenshot from the Daily Star’s YouTube channel, which asks whether Liz Truss’ stint as prime minister of the United Kingdom will “outlast” a head of lettuce. YouTube/Everyday Star
Truss first attempted to maintain the status quo after her administration’s package of $50 billion in unfunded tax cuts terrified markets, increasing government borrowing rates, increasing house mortgage payments, and driving the pound to an all-time low against the dollar. The Bank of England was compelled to act to defend pension funds that were being pinched by bond market volatility.
Under severe political and economic pressure, Truss removed her ally Kwasi Kwarteng as Treasury secretary last week and replaced him with Jeremy Hunt, a Cabinet veteran who had been sidelined since 2019.
Hunt rescinded nearly all of Truss’ tax cuts on Monday, along with her signature energy program and her pledge that there will be no cuts to public spending, citing “more painful decisions” to come.
U.K. Prime Minister Liz Truss (lower right) listens as Chancellor of the Exchequer Jeremy Hunt (center) talks on the floor of the House of Commons in London on October 17, 2022. House of Commons/PA Photographic Images/Getty
The market for British government bonds and the pound dropped on Tuesday as the realization that the new policies are likely to result in slower economic growth tempered the relief at the government’s decision to abandon unfunded tax cuts.
In late morning trading in London, the pound slipped 0.75 percent versus the U.S. dollar to $1.1273, after gaining as much as 1.2% on Monday. The yield on 10-year government bonds increased to 4.081% from 3.971% on Monday. Bond yields, which indicate the return investors receive on their investment capital, tend to increase as a borrower’s creditworthiness declines and decrease as it improves.
While one could argue that yesterday’s measures have stabilized the public finances in the short term and returned the United Kingdom to the pack in terms of market perceptions of fiscal responsibility, one must ask what the cost will be to the economy next year, according to Michael Hewson, chief market analyst at CMC Markets UK.
Many Conservatives now believe that replacing Truss is their best shot of avoiding electoral doom in light of the opposition Labour Party’s enormous and growing lead in the polls.
According to Conservative Party regulations, Truss is immune to a leadership challenge for one year, although these rules can be altered if a sufficient number of parliamentarians so desire. Some Conservative MPs feel that Truss can be compelled to quit if the party can agree on a replacement. However, the party’s multiple factions, which span from hard-right Brexiteers to moderate “One Nation” Conservatives, make that difficult.
Former Treasury chief Rishi Sunak, whom Truss defeated to gain the country’s top job, House of Commons leader Penny Mordaunt, and popular Defense Secretary Ben Wallace all have admirers, as does Hunt, whom many view as the de facto prime minister already.
Some Conservative lawmakers desire the return of Boris Johnson, who was removed from office in the summer due to his involvement in ethics problems.
Boris Johnson faces calls for his immediate resignation as prime minister following the announcement of his resignation at 05:00.
A national election is not required until 2024, and several Conservatives believe Truss deserves a second opportunity. If Truss were to lead the party into the next election, said legislator Charles Walker, “I believe we’ll be out of power for 15 years.”
Even for a nation that has witnessed enough of political turmoil in recent years, the upheaval is unparalleled. Since the shocking 2016 referendum result to leave the European Union, Britain has experienced years of acrimonious fighting with the EU, two general elections, and three Conservative prime ministers.
Tony Travers, a visiting professor in the Department of Government at the London School of Economics, remarked, “British politics and economics are occasionally tumultuous, as they are in many nations.” “However, the combination of the two – where a political crisis effectively generates an economic catastrophe, from which the government must then attempt to bail itself out – I believe is essentially unprecedented.”