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.
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