A mind game: It is October 31st, the Tories have managed, despite the traditional elbow mentality, to agree on a successor for the crashing failed Liz Truss. So what’s next for premier number three this year?
The prime minister-to-be is not to be envied for this job, for this legacy in ruins. “Whoever wins, loses”, headlines the US news portal “Bloomberg” very aptly. An overview of (some of) the biggest challenges facing the new Premier.
What lies ahead is “a leap into the unknown,” said Antoine Bouvet, interest rate strategist at ING Bank, to the “New York Times” (NYT). That is probably putting it mildly, considering the desolate condition in which Truss will hand Downing Street over to her successor: Inflation is now more than ten percent, food prices have not risen so quickly for four decades, wages are not keeping up , at the same time interest rates are rising. Broom clean looks different.
Truss, who at least has her place in the history books as prime minister with the shortest term in office, had promised a solution to all of this. It was called tax cuts. And massive. As the NYT notes, at its core its “trussonomics” was very reminiscent of the so-called trickle-down economics of the 1980s, which “was based on the belief that tax cuts were fair to the wealthy and would lead to investment and economic growth common to all would benefit”.
The problem with the matter: when your ex-finance minister Kwasi Kwarteng presented the corresponding 45 billion pound plans, he failed to answer the most important question: how should the loans be financed? The fact that the deal was not independently audited was also punished by the markets – the pound fell to a record low, government bond yields shot up so high that the central bank had to step in to save pension funds. In short, fiscal credibility melted in step with Truss’s modest approval ratings. “It takes years to build a reputation and a day to destroy it,” Bouvet told the NYT. Bringing something resembling stability to the British economy will be arguably the most pressing and difficult project for Truss’s legacy. Kwarteng’s successor, Jeremy Hunt, did what had to be done, but in doing so sealed his boss’s downfall once and for all: he backtracked with full force.
However, the economy is still a long way from recovering from the Truss shock. Hunt plans to present a “medium-term financial plan” soon. Appropriately, he wants to present his results on Halloween. After all, the finance minister will have the whole thing checked independently this time. But even then, according to the NYT, a construction site remains open. Experts are wondering how Hunt intends to push through the “difficult” spending cuts that he announced in advance – after all, there is hardly any leeway in the ministries, which have already been cut to the limit. This, in turn, fuels fears that austerity measures similar to those used during the 2008 financial crisis are imminent.
In view of the horrendous food prices, selling this will probably require no less than a rhetorical masterpiece from the new prime minister. As economist Chadha explains to the US newspaper, the first thing to do is to completely reverse the unfunded tax cut debacle and come up with a budget support plan. That could make it necessary for Hunt to have more say in the end than Truss’ successor. “Until Britain finds a way to make economic progress, its global role will be in jeopardy,” agrees Frances Burwell of the US think tank Atlantic Council.
At the same time, analysts are forecasting significantly lower growth for the British economy in the coming year – which in turn limits the central bank’s room for maneuver and, conversely, puts a stop to urgently needed investments. Yes, the third Prime Minister this year will have to do the toughest economic clean-up work. Rarely has the spotlight shone brighter on Downing Street, and seldom have the starting conditions for a new head of government been less favourable. “The fear of repeating their [Truss’] mistakes will not only limit the ambition of the next leader […],” said Ben Judah of the Atlantic Council.
Truss leaves behind a pile of rubble, and not only economically. Her party is also unlikely to recover from the debacle of her historically short term in office. They have already ruled out the possibility that the conservatives will waive their right due to a lack of democratic legitimacy and instead call new elections. For good reason. According to polls, Labor is currently winning hands down, while the Tories are losing hundreds of seats.
And so one thing must be clear: Truss’ successor will (once again) not be a prime minister by the grace of the people. If the Tories do not quickly agree on a party leader, the approximately 170,000 party members would have to appoint a new prime minister – but that would correspond to the will of less than 0.4 percent of the population eligible to vote. It was also this elite minority (usually wealthier and older than the average Brit) that got Truss into office in the first place, news network Conversation notes. One can’t expect much from the Conservatives anyway, “but the poor thinking of the party leadership is striking,” says the magazine. The past serves the party “not as a helpful signpost for the future, but as a destination”. In other words: one expects little and is still disappointed. Whoever is presented by MPs or the party base this time has to mend the joints of a deeply divided country with even less support.
According to the US news agency AP, the numerous Tory factions, from strict Brexit supporters to centrist “One Nation Tories”, are already at each other’s throats. “Nobody has a plan on how to proceed. It’s a daily hand-to-hand battle,” Conservative MP Simon Hoare told the BBC on Thursday ahead of Truss’s resignation. So pacifying the divided party is likely to be the second Herculean task for the new prime minister. Logically, that would be much easier if the deputies were united behind a candidate.
But the new head of government will not only have to calm things down within the party. The political chaos and parliamentary chairs that have been making day-to-day business more difficult since Brexit have damaged the kingdom’s credibility far beyond national borders. “Britain may be an island, but it is not alone. Europe and the UK need each other, and they need focus and political will to build a productive relationship,” summarizes the Atlantic Council.
Quellen: “New York Times”; “Associated Press”; “Atlantic Council”; “The Conversation”
