The Prime Minister’s Brexit-driven ideology is pushing the UK economy off a cliff and her own MPs fear they may not be able to stop her, reports Adam Bienkov
The pound is plummeting, government borrowing costs are soaring and the Bank of England has spent tens of billions to stem a run on UK pension funds. Meanwhile, mortgage lenders are pulling back products as traders somberly warn the UK is on the brink of a Lehman Brothers-style collapse.
And yet Downing Street is said to say that absolutely everything is going according to plan.
Government sources told reporters on Wednesday that there would be “no change” to their policies, instead suggesting the current crisis was an “anomaly” caused by international markets failing to understand the sophisticated nature of Truss’ economic plan to have.
Rather than backtracking on proposals to give massive tax cuts to millionaires, ministers were instead asked to find “efficiency savings” in public services instead. Chief Secretary to the Treasury Chris Philp suggested Wednesday night that beneficiaries could also be asked to accept actual cuts in their support.
Speaking to the BBC on Thursday morning, Liz Truss insisted she will go ahead as it is “the right plan that we have made” and “we need to execute on it”.
For many Conservative MPs, this is not just fantasy economics, but fantasy politics.
With polls suggesting the party’s economic credibility is now in shambles, they fear their new leader is pushing them towards an “annihilation-level” event. A poll earlier this week suggested the Conservatives are now facing electoral annihilation at 1997 levels.
A distraught Tory MP and former cabinet minister said byline times on Wednesday that Truss’ plan, and in particular her decision to end the top tax rate, is seriously damaging the party’s hard-won reputation in the business world. “The 45p cut is really toxic,” they said.
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What has particularly incensed them is the fact that Truss’s heavy focus on tax cuts for high earners has almost completely distracted the public from the significant support that the Treasury Department is giving to households, including on energy bills.
“Colleagues are angry that the energy package is being completely overshadowed,” said a Conservative MP. “It takes an enormous amount of effort to really solve an extraordinary challenge for households and businesses, and it has gone down without a trace.”
Truss’ determination to move ahead with her plans despite the red lights on the UK economic dashboard has taken some of her MPs by surprise.
“There was absolutely no pitch rolling [for this plan]said one byline times.
In reality, however, the Prime Minister’s recent actions are fully consistent with the arguments she made during this summer’s leadership contest.
For two months, Truss dismissed warnings from her rival Rishi Sunak that her plans would endanger the stability of Britain’s economy, while insisting that the days of “handouts” for low earners were over.
“To look at everything through the lens of redistribution I think is wrong,” Truss told the BBC shortly after becoming prime minister, before adding that it was only “fair” that the bulk of her tax cuts should go on top the income scale.
Truss continued to take those lines on her broadcast this morning, despite a brutal series of questions from local radio stations and their listeners.
Truss spoke in characteristically ponderous and unemotional terms and showed no sign of remorse or any sign that she plans to change course in any way. Under its current plans, the Treasury will not even review its economic agenda for the next eight weeks – and this morning there was little sign of that changing anytime soon.
Brexit ideologues are driving the economy over a cliff
Conservative MPs are now desperately hoping this is all just boasting. They expect that as the crisis deepens, the PM will inevitably be forced into a series of about-faces to stabilize the economy.
Maybe she will, but there’s also a chance that Truss actually believes in the harsh economic “shock doctrine” she’s now employing.
There is a possibility that if their aides and frontrunners inform that the International Monetary Fund (IMF), currency traders and the public sector are all “woke” agents trying to block their glorious economic revolution, or that the whole crisis will somehow has been fabricated by the opposition leader into actually believing it.
It is possible that the Prime Minister is fully convinced of her own rhetoric and that, when faced with the decision of whether to plunge Britain’s economy over the cliff or admit she was wrong, she will enthusiastically do the former.
This is not as unlikely as it might seem.
Since the EU referendum, the Conservative Party has embraced an economic and political project that even its own government predicted would result in significant impoverishment in Britain. It has continued with this plan despite clear and growing evidence that it has made life and work significantly more difficult for businesses and individuals across the country.
In a way, Truss’ new hard economic agenda is just the logical end point of this process. If you believe, as Truss and her allies clearly do, that the only way for the UK to thrive is to become a small, low-tax, low-regulation state outside the European Union, then you will be ready to take any means necessary to achieve this goal, even if it means an economic collapse.
However, progress will be difficult. Conservative MPs are already warning against intervening if she proceeds with all of last week’s mini-budget measures. A senior figure in the party predicted there would be considerable rebellion in her benches in the House of Commons if the Prime Minister voted on her plans. It is also unlikely that the Bank of England and other institutions will stand idly by if the government stays on its current course.
However, with Truss clinging to the vast majority she inherited from her predecessor Boris Johnson and with her apparent determination to ignore opposition to her plans, none of that might be enough.
Faced with a similar setback, Johnson has often been criticized for his tendency to regularly do about-faces. But as embarrassing as these about-faces were, they were also necessary to prevent his own government and country from heading towards total disaster.
The chilling prospect Truss offers as Prime Minister is that she lacks the same safety valve, and that she really means business when she insists we all have no choice but to proceed with her reckless and dangerous economic plans.
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