44 days later: Reaction to a turbulent week in politics

An independent personal viewpoint on political events of the last few days by Dr Stephen Barber.
October 21, 2022

It would be fool­ish to sug­gest that the res­ig­na­tion of Liz Truss as Prime Min­is­ter after just 44 painful days, sig­nals the end of a calami­tous peri­od of polit­i­cal chaos. That it seems will rum­ble on until an even­tu­al Gen­er­al Elec­tion. How­ev­er, it is just pos­si­ble that the dis­as­ter of recent weeks has ensured a wel­come degree of eco­nom­ic dis­ci­pline. Whomev­er takes the Tory lead­er­ship, and there­fore becomes our next Prime Min­is­ter, is like­ly to have lit­tle choice than com­mit to retain­ing Jere­my Hunt as Chan­cel­lor of the Exche­quer. And what­ev­er promis­es are made over the com­ing days by can­di­dates eager to win the sup­port of their par­ty, there is lit­tle stray­ing from the direc­tion set and deci­sions made by Hunt.

If Liz Truss’s brief admin­is­tra­tion rep­re­sents any­thing, it is a crash­ing back into the real world, so absent from polit­i­cal dis­course since 2016. Kwasi Kwarteng’s so-called ‘Mini-Bud­get’ of just a few weeks ago was the cul­mi­na­tion of a sort of fan­ta­sy pol­i­tics which divorces pol­i­cy mak­ing from real­i­ty, which dis­miss­es experts as being part of the ‘anti-growth coali­tion’, and which con­fus­es vac­u­ous and pop­ulist cam­paign­ing with the respon­si­bil­i­ty of governing.

The famil­iar faces of the front run­ners eager to replace Truss have already emerged. But whether it is Rishi Sunak, Pen­ny Mor­daunt, or Boris John­son who grabs the crown, Britain is in a dif­fer­ent place than it was just five weeks ago. The dra­mat­ic reac­tion in inter­na­tion­al mar­kets to the mea­sures out­lined by Truss and Chan­cel­lor Kwarteng were impos­si­ble to dis­miss as being sim­ply the result of geo-polit­i­cal pres­sures expe­ri­enced by oth­er countries.

It was self-inflicted.

That the Gov­ern­ment announced the biggest tax cuts in half a cen­tu­ry and that these were pre­sent­ed unfund­ed and with­out accom­pa­ny­ing OBR fore­casts fright­ened glob­al mar­kets. It was fan­ta­sy pol­i­cy mak­ing which imme­di­ate­ly led to a dra­mat­ic slump in the val­ue of the Pound, bil­lions wiped off the val­ue of UK quot­ed shares and a seri­ous increase in the cost of UK bor­row­ing on bond mar­kets. The Bank of Eng­land was forced into an emer­gency intervention.

Chaos.

That chaos was so pro­nounced that there was only one course of action. Kwartang, sacked for imple­ment­ing the promis­es on which Truss made to Tory mem­bers, was replaced by a sober and seri­ous Jere­my Hunt. His actions restored calm to mar­kets and some con­fi­dence in the British econ­o­my by trash­ing ‘Trussa­nomics’ and per­form­ing a com­plete U‑turn on the Budget.

But at what price?

Truss paid the price first in her author­i­ty and then in the job she had long craved. But pop­ulist pol­i­tics paid the price too. Hunt’s bit­ter med­i­cine for Britain in the shape of tax ris­es and a pub­lic spend­ing squeeze are unlike­ly to make the Gov­ern­ment pop­u­lar. But they might just have sig­nalled a return to the real world. Per­haps Truss per­formed one great ser­vice for Britain after all.