Britain’s new finance chief repudiates troubled PM’s economic plan
LONDON — Britain’s beleaguered prime minister, Liz Truss, suffered new humiliation Saturday when the free market, libertarian economic policy program on which she won power was repudiated by the politician she appointed to try to restore the country’s financial stability.
In an attempt to salvage her faltering leadership, Truss on Friday had reversed one key tax policy; fired her ally,
Kwasi Kwarteng, as chancellor of the Exchequer; and replaced him with Jeremy Hunt, a more pragmatic former Cabinet veteran.
Whether that will prove enough to save Truss, whose authority seems to be ebbing away after less than six weeks in Downing Street, remains to be seen. On Saturday, Hunt called time on what the British media have called “Trussonomics” — Britain’s brief, ill-fated experiment in promising unfunded tax cuts theoretically paid for by anticipated economic growth generated by lower taxation rates and structural changes.
That strategy, fleshed out by Kwarteng on Sept. 23, sent the pound sterling plunging and raised borrowing costs for the government, a development that rippled through into the domestic housing loan market.
Seeking to steady the ship, Hunt, a former foreign and health secretary, on Saturday embraced traditional economic orthodoxy — something Truss had railed against during her campaign to become the leader of the Conservative Party and, hence, prime minister.
In an interview with the BBC, Hunt said that some taxes would now go up, while others would “not be cut as quickly as people want.” Spending on government programs “will not rise by as much as people would like,” he added, preparing voters for some painful cuts in budgets already ravaged by rampant inflation.
“What you got in today’s interview was Jeremy Hunt indicating to the outside world that he gets the extent of the credibility loss, and what’s needed in terms of a reset,” said Jill Rutter, a former civil servant and a senior fellow at the Institute for Government, a Londonbased research group.
“But he’s also signaling to the rest of the government, effectively, that he has taken back control of economic policy,” she added.
That underscored the fact that the abject failure of Truss’ signature economic plan has left her “hanging by a thread,” in the words of William Hague, a former Conservative Party leader, with her own lawmakers privately debating whether, and how, she could be removed.