When you have a baptism of fire, the last thing you need to do is throw fuel on its flames. But that is exactly what the Prime Minister and the Chancellor did last Friday with the so-called ‘mini budget’. And it has blown up in their faces.
The frustrating thing for the Conservative Party was that it was so easily avoidable. As Keir Starmer said it was a “self-inflicted wound”.
Kwasi Kwarteng only had to throw a few bouquets out to see a bounce in the governments poll ratings – the fuel price subsidy for businesses and consumers; the reversal of the National Insurance hike; and the postponement of the increase in Corporation Tax – instead he threw in the hand grenade of bankers bonuses and the abolition of the 45% tax rate for the highest earners, creating a high, wide, and handsome political open goal for the Labour Party, and causing panic in the markets.
As the pound plummeted, interest rates soared, and mortgage offers were withdrawn, Truss found her anticipated honeymoon turning into a nightmare from which she may not recover.
Once you lose your credibility as an economically competent administration, it is hugely difficult to recover. As the old saying goes, it takes years to build a reputation, but only a minute to destroy it.
There are many precedents that suggest that this could be the end right at the beginning of the Truss era. The IMF intervention in the UKs fiscal affairs finished off Jim Callaghan’s Labour government in the late 1970s. Black Wednesday ended Norman Lamont’s chancellorship, but then hung around John Major’s government like a bad smell for the remainder of the 1992-97 parliament, concluding with a landslide victory for Tony Blair. The financial crash of 2008 was pinned on Gordon Brown, and he was toast two years later – despite him being credited with being the key player in saving the global economy.
Can the new PM buck the trend? Her round of interviews with local radio stations does not appear to have done much to re-energise support for her, in the country or in her parliamentary party. This weekends media round and the Sunday broadsheets coverage will either add to her woes, or maybe offer some comfort to the government’s ‘growth plan’ approach.
But, just weeks after winning the leadership of her party, Liz Truss faces her first conference since assuming the role with the very real prospect that this could be the last time she does so.
The Conservative Party wouldn’t do in another party leader, would they? I wouldn’t be so sure. If I were Liz Truss, I’d be sleeping with one eye open in Birmingham next week.
