After just 44 days in office as the British prime minister, Liz Truss announced her resignation on October 20th, 2022, officially making her the shortest-serving prime minister in the country’s history. Truss’ brief tenure was marked by sharply-criticized economic policies, including tax cuts for the wealthy during an energy crisis. Truss’ time in office, during which she hit the lowest approval rating of any PM, not only saw the tanking of the British economy and the forced intervention of the Bank of England, but also left the Conservative Party divided and gave the opposing Labour party a significant lead in support.
Truss’ tenure began with the resignation of Boris Johnson, who was forced to relinquish his office due to numerous scandals. The election for prime minister within the conservative party following Boris’ resignation was primarily between Truss, the then foreign secretary and an avowed libertarian, and the then chancellor Rishi Sunak, a more moderate conservative (and the man who would replace Truss following her resignation). A key point of contention between the two was the issue of taxes. Where Truss ran on the platform of tax cuts for all, Sunak warned that Truss’ policies would amplify inflation. Ultimately, Truss’ existing popularity within the membership of the Conservative Party, combined with her tax policies, triumphed over Sunak. On September 6th, 2022, Truss became the prime minister of the U.K. with a +4% net approval rating.
Truss’ time in office was immediately impacted by the death of Queen Elizabeth II on September 8th, 2022, just two days after she became prime minister. The Queen’s passing thus began a period of mourning that lasted until September 19th, only after which Parliament was able to resume on September 21st. However, on the 21st, and 22nd, Truss was occupied with a U.N. meeting in New York, and only arrived back in England on Friday, the 23rd to hear the announcement of her mini-budget.
Truss’ mini-budget was also known as “The Growth Plan”. It aimed to increase economic growth through tax cuts which would be paid for through the U.K. national debt. However, some of these tax cuts were not pre-announced, and in total, these tax cuts were set to cost the treasury around £45 billion. Furthermore, despite these, Truss did not plan any spending cuts to help fund the plan, and as a result, the markets recoiled at her plan, and the value of the British pound plummeted to a 37-year low against the U.S. dollar. However, this debacle was only the beginning of a quick descent into instability for the British economy. The markets then closed for the weekend, stopping the value of the pound from decreasing any further.
Despite the market’s closing, there was a significant public uproar regarding the mini-budget, which disproportionately benefited the wealthiest people through significant tax breaks in the top tax bracket. As a result, the Labour party began to pull away from the Conservatives in support, and the Labour party leader, Sir Keir Starmer, officially surpassed Truss in best PM ratings.
Upon the reopening of the markets on Monday, September 26th, the value of the pound fell again to a new low. The Bank of England was forced to intervene with a £65 billion emergency plan to buy government bonds, or “gilts’ ‘ in order to prevent the panic selling of these gilts in the aftermath of the mini-budget announcement. However, after Truss failed to walk back any of her policies, the markets began to react negatively again, and the Labour party further solidified its popularity lead over the Conservatives.
Truss then attended the Conservative Party Conference, but what usually was a straightforward affair quickly descended into chaos, with several Tory members of Parliament (MPs) criticizing Truss’ tax plans, ultimately leading her to walk back her policy for the top rate of tax. Unfortunately for Truss, however, this move didn’t help much, mainly because the tax breaks for this top bracket only amounted to around £2 billion out of the total £45 billion hole she had dug. Coming out of the conference, she had a -44% approval rating, the lowest ever for a sitting PM, and had all but solidified the Labour party’s lead.
However, this was not enough for Truss, and on Wednesday, October 12th, she announced that she would not cut public spending to fund the tax cuts, another move which the markets balked at. Desperately, in an attempt to alleviate the markets, Truss fired Kwasi Kwarteng, the finance minister of the U.K., on Friday, October 14th and replaced him with Jeremy Hunt. The next Monday, Hunt announced that almost the entire mini-budget would be reversed, and in direct contradiction to Truss’ earlier statements, Hunt said that public spending cuts would be necessary.
Though Hunt’s swift actions did appease the markets, this complete 180 essentially nullified Truss’ entire plan, thus weakening her authority and decreasing even further her approval ratings to -61%. For comparison, Prince Andrew’s approval rating is around -65%. Ultimately, with Truss’ key campaign promises being walked back, and her entire political agenda being discarded, on October 20th, 2022, Liz Truss walked out of her office on 10 Downing Street, and announced her resignation as prime minister of the U.K.
However, the end of Truss’ tumultuous tenure did not mark the end of her controversies, as many were quick to point out that the former PM would be able to collect £115,000 annually from a U.K. law. Given the brevity of her time in office, numerous calls were made for Truss to decline this annual allowance, including one by Sir Keir Starmer, who told Good Morning Britain, “She’s done 44 days in office, she’s not really entitled to it, she should turn it down and not take it.”
Following Truss’ time in office, the Conservative Party elected Rishi Sunak as the replacement PM, their 3rd in less than two months. Sunak is the first PM of color, the first Asian PM, and the first Hindu PM. However, despite running on a platform of unity and financial stability, the turbulent political climate in the U.K. will likely prove difficult to navigate for Sunak, especially amidst growing calls for a general election which would likely result in a landslide Labour victory. Being worth £730 million certainly does not help Sunak’s cause in terms of trying to be in touch with the desires of working-class Britons, and the overall bleak outlook for the Conservative Party, especially with regard to necessary tax hikes and spending cuts, will force Sunak to make tough decisions as PM. Trying to balance the unity of his party and the stability of the British economy, alongside inciting growth in his economy, is certainly a challenging position and definitely not an enviable one. Only time will tell if Sunak’s policies will be enough to save the economy, and if so, whether or not he will be willing to pursue them.
