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.
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.