The parable of Liz Truss is, by now, world famous. A free-market idealogue was elected leader by the radical wing of her party, then trashed the economy by enacting her deficit-financed tax cuts. She invoked Hayek and Thatcher and was cheered on by their admirers. But her mini-Budget terrified the market and she had to quit – after doubling everyone’s mortgage rates. In the end, it was not the experts she was rebelling against, but economic reality. She had applied 1980s economics to the 2020s and it had ended in disaster, for her and for her country.
As prime minister, Truss was stunned by the potency of this narrative. Not only the IMF but Joe Biden weighed in to criticise her for reasons she considered demonstrable nonsense. She was hardly cutting any taxes: just a penny from income tax and reversing the fairly recent National Insurance hike. There was also a cut for the very highest earners, which cost very little. But her mini–Budget was, in most part, a borrow-and-spend extravaganza to subsidise fuel bills for every household in the land. How can this be twisted into a narrative that tax cuts don’t work?
In the end, it was not the experts she was rebelling against, but economic reality
When Katy Balls and I meet her in her new office in Portcullis House to record an interview for Spectator TV, she says she believes enough time has passed to talk plainlyabout her 49-day premiership and disentangle what went wrong. Her hopes of being a lean tax-cutter, she says, were flattened upon her arrival in No. 10 by the global energy price surge – leading most governments in the world to start huge bailouts for terrified consumers. Truss ended up making her mini-Budget into one of the biggest borrow-and-spend splurges in UK history. She justifies it nonetheless.
Comments
Join the debate for just £1 a month
Be part of the conversation with other Spectator readers by getting your first three months for £3.
UNLOCK ACCESS Just £1 a monthAlready a subscriber? Log in