Liz Truss’ waning power brings political plots, and jokes
Conservative Party divided over how to replace her
Powerless, humiliated, labeled a "ghost" prime minister and compared unfavourably to a head of lettuce – this is not a good week for Liz Truss.
Britain’s prime minister was scrambling to recover her grasp on power Tuesday after her economic plans were ripped up and repudiated by a Treasury chief whom she was forced to appoint to avoid meltdown on the financial markets.
Liz Truss remains in office, for now, largely because her Conservative Party is divided over how to replace her.
In a bid at business as usual, Truss held a Cabinet meeting on Tuesday, where, her spokesman said, there was an “in-depth discussion” of the new economic plan, and no one asked her to resign.
Truss also met lawmakers from rival Conservative factions, arguing that keeping her in post can provide stability, even though she has had to ditch almost the entire prospectus on which she was elected party leader just six weeks ago.
Chastened but defiant, Truss acknowledged Monday that “mistakes were made” – but insisted she would lead the Conservatives into the next national election.
United
Few believe that. Britain’s lively, partisan press is unusually united in the opinion that Truss is doomed. The Conservative-backing tabloid The Sun called her “a ghost PM” and said “for the sake of the country, we cannot go on like this.”
The left-leaning Guardian compared the Conservatives to a mutinous ship’s crew, saying “Truss has not left her party. But it appears to have left her.”
After The Economist said Truss’ time in control of the government – before the 23 September “mini-budget” that set the markets aflame – was “roughly the shelf-life of a lettuce,” the tabloid Daily Star set up a livestream featuring a photo of the prime minister beside a head of iceberg, adorned with a blond wig, eyes and a mouth. It asks “Can Liz Truss outlast this lettuce?” – which, five days in, is gradually turning brown.
Truss initially tried to stay the course after her government’s package of 45 billion pounds (US$50 billion) in unfunded tax cuts spooked the markets, pushing up government borrowing costs, raising home mortgage costs and sending the pound plummeting to an all-time low against the dollar. The Bank of England was forced to intervene to protect pension funds, which were squeezed by volatility in the bond market.
Decisions
Under intense political and economic pressure, Truss last week fired her ally Kwasi Kwarteng as treasury chief, replacing him with the Cabinet veteran Jeremy Hunt, who had been sidelined since 2019.
On Monday, Hunt scrapped almost all of Truss’ tax cuts, along with her flagship energy policy and her promise that there will be no public spending cuts, saying there are “many difficult decisions” to be made before he issues a medium-term fiscal plan on 31 October.
The market for British government bonds and the pound weakened Tuesday as relief over the government’s about-face was tempered by the recognition that the new policies are likely to mean slower economic growth.
The pound fell 0.75% against the US dollar to US$1.1273 in late morning trading in London, after jumping as much as 1.2% on Monday. Yields on 10-year government bonds rose to 4.081% after dropping to 3.973% on Monday. Bond yields, which represent the return investors receive on their money, rise as a borrower’s creditworthiness decreases and decline when it improves.
Growing lead
“While one could argue that yesterday’s measures have stabilised the public finances in the short term and pulled the UK back into the pack as far as market perceptions of fiscal responsibility is concerned, one must question at what price to the economy next year,” said Michael Hewson, chief market analyst at CMC Markets UK.
With opinion polls giving the opposition Labour Party a large and growing lead, many Conservatives now believe their only hope of avoiding electoral oblivion is to replace Truss.
Under Conservative Party rules, Truss is safe from a leadership challenge for a year, but those rules can be changed if enough lawmakers want it. Some Conservative legislators also believe Truss can be forced to resign if the party can agree on a successor. But the many divisions in the party — whose factions range from hard-right Brexiteers to centrist “One Nation” Conservatives — makes that a challenge.
Liz Truss remains in office, for now, largely because her Conservative Party is divided over how to replace her.
In a bid at business as usual, Truss held a Cabinet meeting on Tuesday, where, her spokesman said, there was an “in-depth discussion” of the new economic plan, and no one asked her to resign.
Truss also met lawmakers from rival Conservative factions, arguing that keeping her in post can provide stability, even though she has had to ditch almost the entire prospectus on which she was elected party leader just six weeks ago.
Chastened but defiant, Truss acknowledged Monday that “mistakes were made” – but insisted she would lead the Conservatives into the next national election.
United
Few believe that. Britain’s lively, partisan press is unusually united in the opinion that Truss is doomed. The Conservative-backing tabloid The Sun called her “a ghost PM” and said “for the sake of the country, we cannot go on like this.”
The left-leaning Guardian compared the Conservatives to a mutinous ship’s crew, saying “Truss has not left her party. But it appears to have left her.”
After The Economist said Truss’ time in control of the government – before the 23 September “mini-budget” that set the markets aflame – was “roughly the shelf-life of a lettuce,” the tabloid Daily Star set up a livestream featuring a photo of the prime minister beside a head of iceberg, adorned with a blond wig, eyes and a mouth. It asks “Can Liz Truss outlast this lettuce?” – which, five days in, is gradually turning brown.
Truss initially tried to stay the course after her government’s package of 45 billion pounds (US$50 billion) in unfunded tax cuts spooked the markets, pushing up government borrowing costs, raising home mortgage costs and sending the pound plummeting to an all-time low against the dollar. The Bank of England was forced to intervene to protect pension funds, which were squeezed by volatility in the bond market.
Decisions
Under intense political and economic pressure, Truss last week fired her ally Kwasi Kwarteng as treasury chief, replacing him with the Cabinet veteran Jeremy Hunt, who had been sidelined since 2019.
On Monday, Hunt scrapped almost all of Truss’ tax cuts, along with her flagship energy policy and her promise that there will be no public spending cuts, saying there are “many difficult decisions” to be made before he issues a medium-term fiscal plan on 31 October.
The market for British government bonds and the pound weakened Tuesday as relief over the government’s about-face was tempered by the recognition that the new policies are likely to mean slower economic growth.
The pound fell 0.75% against the US dollar to US$1.1273 in late morning trading in London, after jumping as much as 1.2% on Monday. Yields on 10-year government bonds rose to 4.081% after dropping to 3.973% on Monday. Bond yields, which represent the return investors receive on their money, rise as a borrower’s creditworthiness decreases and decline when it improves.
Growing lead
“While one could argue that yesterday’s measures have stabilised the public finances in the short term and pulled the UK back into the pack as far as market perceptions of fiscal responsibility is concerned, one must question at what price to the economy next year,” said Michael Hewson, chief market analyst at CMC Markets UK.
With opinion polls giving the opposition Labour Party a large and growing lead, many Conservatives now believe their only hope of avoiding electoral oblivion is to replace Truss.
Under Conservative Party rules, Truss is safe from a leadership challenge for a year, but those rules can be changed if enough lawmakers want it. Some Conservative legislators also believe Truss can be forced to resign if the party can agree on a successor. But the many divisions in the party — whose factions range from hard-right Brexiteers to centrist “One Nation” Conservatives — makes that a challenge.
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