DC Edit | Rishi or Boris? UKâ€™s next PM to need eco wisdom
The clock was ticking on Liz Truss the moment she became Britain’s Prime Minister by displacing Boris Johnson at 10 Downing Street. The hot seat was not the most desirable place at a time of such economic headwinds that Britain was slipping towards stagflation and anyone putting his or her hand up for the gaddi was likely to fail at a herculean task. No wonder then that her 89-second resignation speech was proportionate to the briefest reign of a Prime Minister in British history.
It was her competence at what was basically a job in economics that was in question when she beat Rishi Sunak in a run-off for Prime Minister with the Tory MPs being the electorate. It was suspected then that Boris Johnson, under pressure from Partygate, had cynically chosen Liz Truss as his successor over the head of his former protégé Rishi Sunak so he could create a comeback trail for himself. Current events, with Boris throwing his hat in the ring again, seem to support the theory, even if it is being said that Rishi is leading his mentor in the race now, with Penny Mordaunt a third serious contender.
The economic crisis was at its worst in the grip of a double whammy of the slowdown caused by the Covid-19 pandemic and runaway inflation triggered by the high energy prices induced by the Russian invasion of Ukraine when Ms Truss joined the battle for king and country. In a rush to stave off economic doom so soon after their beloved Queen Elizabeth II had been buried in Windsor Castle, Ms Truss and her chancellor, Kwasi Kwarteng, put together an outlandish tax-cutting package that was variously derided as “fantasy,” “fairytale” or “abacus economics”.
A bond market crash was threatening the UK, much like Italy, even as emergency Chancellor Jeremy Hunt took over to calm the stormy waters. The Truss-Kwarteng package seemed so much in favour of the rich and towards spending more despite the inflation that it was an open invitation to disaster and the market rejected it outright driving up mortgage rates and setting the pound sterling plunging. It is a different matter that highly debt-loaded economies cannot afford to defy fiscal reality and expect to keep interest rates low forever.
Ms Truss’s U-turns — on lowering the 45p tax slab and corporation tax, 20p tax cut, 2-year energy price freeze and tax-free shopping — which were pounced upon by Labour leader Keir Starmer showed what a wrong path she and her Chancellor had chosen when hyperinflation and a threat of recession were to be faced head-on.
It is clear as crystal that the Tories need to put on their thinking cap and choose a new leader, regardless of race and migrant background (even if the final choice is Rishi Sunak or if Mr Johnson coming galloping back on a white charger); and they must do so at once to have any hope of retaining power at the looming general elections.
In the crash of the British economy and the resultant leadership crisis leading to the installation of a fifth Prime Minister since the Brexit referendum is a lesson for the world itself, buffeted as it is by the same economic challenges of rising interest rates, energy costs and inflation even as pension funds are feeling the pinch and labour unrest is fast spreading. The fear is, whether or not the British economy is the first of the dominoes.