December 8, 2022

Brighton Journal

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United Kingdom: Liz Truss tries to defend her brief rule and pound sterling falls further | Prime Minister at the Crossroads

From London

Four weeks after being elected leader of the Conservative Party and Prime Minister, the final speech Liz dress before him Annual Party Conference This was his hour of glory, the moment when he announced to the world that he was liberating England from the chains that prevented her from returning to world supremacy. With his 180-degree U-turn on tax cuts for the super-rich this Monday, members of his cabinet are refusing to accept it and his own representatives are in revolt, not just Truss. could sound defiantLike someone trying to save his head from the deadly guillotine with a shout of victory.

Typically one of the biggest events in the British political calendar, closing speeches at party conferences last between an hour and a half as they give leaders an overview of the national and global situation and plans. government (or opposition) for the next 12 months. In this case it lasted more than 30 minutes: it was about avoiding further trips. Unable to: The pound and bonds fell after his speech. This is what happens every time she or her inscrutable finance minister Quasi Quartengo opens her mouth.

Truss-Quarteng project

Dress reluctantly Approved in the budget of conflictGiven on September 23, There were faults, but he justified his spirit And its lyrics with a sophisticated liberal dogma characterize it. “The challenge before us is enormous. A war in Europe, a more uncertain world after Covid, a global economy in crisis. So we Brits need to change course. And when change occurs, disruption occurs. Not everyone will be supportive. But everyone will benefit from a growing economy that will lead us to a better future. So we have a clear plan that we’re going to implement,” Truss said.

The project comes from the pages of a book published by dynamic duo Truss-Kwarteng in 2012, Britannia Unsaint. This “freedom from the shackles” that oppressed Great Britain meant massive tax cuts on the rich and corporations, reforming public spending, and leading the fight against unionism.

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In his address to the conference, the prime minister called for another pillar of the budget: help for households and businesses to cope with rising gas and electricity bills. “Our response to the energy crisis is a very important part of our budget,” Truss said.

In August only one voice was raised against the aid: Liz Truss herself wanted nothing to do with the aid. Thousands of companies would go bankrupt and tens of thousands of families would end up in “energy poverty” (reserving 10% of income for gas and electricity) or the removal of the homeless could bend their instability.

There is a problem with this 180-degree turn. The aid will cost 60 billion over the next six months, and about 150 billion if extended beyond that. Truss rejected a Labor proposal to tax the extraordinary profits of oil and energy companies, which have made a killing from the crisis. But he announced £45bn of tax cuts.

A massive increase in spending, coupled with a massive cut in income yields a result: the accounts will not be closed. Only a £65bn Bank of England intervention last week somewhat calmed the bitter waters in British sovereign bonds and the British pound. The intervention sought to give the government time, but it has a limit: next Wednesday.

So the Truss had to make another 180-degree turn on Monday on one of the budget’s central measures: a tax cut for those earning over £150,000 (which would go from paying 45% to 40%). Markets were quiet for a few hours as accounts were still not closed and the government was lost in the fog.

On the numbers side, the Truss-Kwarteng reversal alone is £2bn of the £45bn tax cut. Published today by Conservative Weekly Economist, World financial markets, amid global turmoil, have already picked on the weakest link in the chain in developed countries: the British pound. But at the political level, there is a consensus across the media that the Conservatives’ annual conference has been “one of the most disastrous in living memory”.

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Rebellion on the farm

Congress on Tuesday looked like a war zone. In an interview BBC Home Secretary Suella Braverman said she was “deeply disappointed” by the tax on the rich and that there was a conspiracy among Conservative MPs to topple the government.

Braverman, who despite his Indian heritage belongs to a staunch anti-immigration faction, pointed to two of Boris Johnson’s MPs and former ministers who criticized the tax cuts: Michael Gove and Grand Shoppes. That same Tuesday Shoppes issued a warning for the Labor Party in a state of polls with between 25 and 30 points. “I don’t think Conservative MPs will stand down if the polls continue like this. The next 10 days will be crucial,” Shabbs said.

The uproar among the Conservatives spilled over into one of the government’s plans to finance the tax cuts: Reduction of social benefits. In an interview, he refused to rule out that social benefits would be aligned with average incomes (a 6% average increase), not inflation (10% or more): this would save £4 billion.

Two members of Truss’s cabinet, Benny Mordant and Robert Buckland, led the charge against this potential move. “I’ve always been in favor of keeping pensions or our welfare state tied to inflation. We can’t hit with one hand and exchange with the other,” Mordant said.

Added to this tumultuous panorama is an immeasurable amount of uncertainty, as the fact is that nothing has been decided in this budget that has raised financial and political dust. On the one hand, the government’s final numbers will only be released by the Office for Budget Responsibility at the end of November to assess its impact. But in addition the Parliament has to approve the budget.

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With the internal decay of the ruling party, it is not ruled out that many conservatives will make common cause with the opposition unless Truss makes some more 180-degree turns. This puts the PM between a rock and a hard place. This is Game over If he doesn’t back down and Parliament doesn’t approve the budget, defeat is tantamount to a resolution of censure. But if he goes back, his politico-economic plan will lose all viability and credibility.

Empty applause

The British love tradition and ethics. The protocol of these conferences is that the leaders receive a standing ovation and even a standing ovation. With the conservatives, as Truss did, all you have to do is raise your voice to criticize their black beasts: the EU, the unions and what he called the “anti-growth coalition”. But unwritten code also dictates that this rite of passage may not last.

In 2003, Iain Duncan Smith, leader of the Conservative Party, received 19 rounds of applause in his closing speech to the Conservative Party Congress. A few weeks later, the Parliamentary Party withdrew its confidence in him: Goodbye Duncan Smith. Of course Duncan Smith was Leader of the Opposition and Truss was Prime Minister, but the background noise was deafening. Truss is betting that in six months the economy will respond with serious growth and this entire crisis will be forgotten. Neither of these conditions is guaranteed. And there is no plan B in sight.