Liz Truss quits. She has a strong claim to be the least successful prime minister in British history
IT WAS the shortest premiership on record. It was also one of the most chaotic. On October 20th, just her 45th day in office, Liz Truss said she would resign as Britain’s prime minister (see chart). In doing so, she opened the way for Britain to get its third prime minister this year.
During her tenure Ms Truss fractured Britain’s reputation for fiscal credibility with a blow-out budget that resulted in a sterling crash, a leap in bond yields and an emergency intervention from the Bank of England. One market strategist labelled the premium suddenly charged by investors in British government debt “moron risk”. The firing of her chancellor, Kwasi Kwarteng, and a huge U-turn on his package of unfunded tax cuts followed. Jeremy Hunt, her second chancellor, is now preparing painful measures to fill in the rest of the fiscal hole. Ms Truss is still technically in office, but her record is being systematically erased.
Although the mini-budget proved the most damaging episode of her blink-and-you-miss-it tenure, her exit was also precipitated by the resignation on October 19th of Suella Braverman, her hardline home secretary, and by a chaotic vote on fracking in the House of Commons later that evening. As it became apparent that she had lost control of her party, more MPs decided to move against her. A trickle of calls for her to resign became a stream; Ms Truss quit before it became a flood.
Her resignation statement was curt and encapsulated much of her premiership. Delivered in a cheery tone, devoid of reflection, she did not try to explain to Britons the past month of chaos, let alone apologise for it. “We set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit,” Ms Truss said in a statement outside Downing Street at lunchtime. “I recognise, though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.” And so she handed her resignation to the king.
The Tory party will now embark on an expedited leadership contest that will be completed in the course of the next week. The winner will be the party’s fifth prime minister since taking office in 2010, and the third this calendar year. The next one may not last that long. The Conservatives trail the Labour Party in the polls by 30 points or so. Sir Keir Starmer, the Labour leader, said it was time for a general election (which must happen by January 2025). “The Tories cannot respond to their latest shambles by yet again simply clicking their fingers and shuffling the people at the top without the consent of the British people,” he said.
Financial markets gave more of a shrug. Gilt yields fell a little over the course of this morning, but by mid-afternoon the ten-year yield was hovering at 3.9%, around the same level it had closed at on the previous day. Sterling bounced a little in the run-up to Ms Truss’s resignation statement, and after it, but compared with the drama of the past few weeks the foreign-exchange market was like a mill pond.
Behind this calm is likely to be the assumption that her departure changes little about Britain’s investment prospects. Ms Truss said the fast contest “will ensure we remain on a path to deliver our fiscal plans”; Mr Hunt is still scheduled, at least for now, to unveil his medium-term fiscal plan on October 31st. The chancellor has said he will not run to replace Ms Truss, a move that may allow him to hold on to his role. But even if he is dislodged, the markets think the direction of travel, towards balancing the books, is clear.
Attention now turns to who comes next. Rishi Sunak, another former chancellor, who won the support of a plurality of MPs in the summer’s leadership contest but lost out to Ms Truss in the vote among party members, is among the favourites. His reputation has been enhanced by the past few weeks of turmoil: during the summer campaign Mr Sunak warned that Ms Truss’s plans for unfunded tax cuts would trigger a crash in sterling and send mortgage costs rocketing. Also in the running is Penny Mordaunt, the leader of the house, who came third in the last leadership contest, trailing Ms Truss among MPs by just eight votes. Ms Braverman may run, to the delight of the Eurosceptic right of the party. Boris Johnson, who is holidaying in the Caribbean, is also touted for a return by his supporters.
Sir Graham Brady, the MP who oversees the Conservative Party’s leadership contests, has pledged that members would have a say over the final two. But MPs will think twice before repeating their mistake of allowing a prime minister to be foisted on them against their will. A stitch-up, in which MPs whittle down a field of contenders and one of the final duo agrees to drop out, is possible. But whoever wins, they will face the same problems of constrained finances and a nigh-on ungovernable party. It is right that Ms Truss has gone. She has a strong claim to be the least successful prime minister in British history. But the country remains at the mercy of the internal machinations of the Conservative Party.■
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