SPECULUM VERUM
For the first time in my adult life, there is a genuine sense of decay in Britain—a realization that something has been lost that will be difficult to recover, something more profound than pounds and pence, political personalities, or even prime ministers. Over the past three weeks, the U.K. has been gripped by a crisis of crushing stupidity, one that has gone beyond all the turmoil of Brexit, Boris, even the great bank bailouts of 2007, and touched that most precious of things: core national credibility.
Today, we had the absurd spectacle of a prime minister, barely a month into the job, abandoning the central tax-cutting purpose of her premiership and sacking her closest political ally, who had implemented this vision. This all in aid of a vain and surely doomed attempt to cling to power, after the markets concluded that her policies were insane. Never before has Britain found itself in such a humiliatingly risible position. It is the stuff of nightmares: the national equivalent of getting caught short onstage in front of your entire school because you chose not to go to the bathroom when you had the chance.
As hard as it is to get across the sheer scale of idiotic farce now unfolding, let’s try. Just last month, on September 6, Liz Truss replaced Boris Johnson as prime minister. Johnson had been forced to resign because Conservative members of Parliament decided he was unfit for office, after, among other things, he had been fined by the police for attending his own birthday party during lockdown. Truss won the race to replace Johnson by presenting herself as both the continuity candidate—the loyal follower who did not kill Caesar—and the new guard who would do away with all the boring bits of Johnsonism, such as raising taxes to pay for things.
What Britain needed, Truss argued, was a tax-cutting bonanza to set it free. Her rival for the leadership was Johnson’s chancellor, Rishi Sunak, who argued for fiscal responsibility and warned that such a reckless policy would lead to a run on the pound and a calamitous series of mortgage-rate rises. Given this choice, the electorate for the Tory leadership—the roughly 170,000 members of the Conservative Party—preferred the magical money tree.
So, on September 23—two and a half weeks after taking over as prime minister—Truss and her new chancellor, Quasi Quarteng, announced an extraordinary array of tax cuts without any indication of how they would be paid for. They called this their “plan for growth.”
And then there was a run on the pound and a calamitous series of mortgage-rate rises.
The reaction to Truss’s plan was immediate and savage. The markets responded with horror at the sudden gaping hole in Britain’s budget. The pound collapsed against the dollar, almost reaching an unprecedented parity, and the cost of government borrowing rocketed. Huge interest-rate increases by the Bank of England began to be priced in as the only way to protect the currency, which, of course, meant stepping on the brakes after Truss had put her foot on the accelerator.
This, in turn, led ordinary banks to start hiking their mortgage rates in expectation of what was coming, just as Sunak had warned, which then sent the property-owning middle classes into a tailspin as they rushed to lock in new rates before the numbers spiked even further. Suddenly, the tax-cutting budget to get Britain growing again had turned into a massive hit on Middle England. Even the International Monetary Fund departed from protocol to issue a sharp rebuke to Truss’s government.
Naturally, Truss’s poll ratings—already low—took a nosedive, sending her to unheard-of levels of unpopularity (currently, a minus-55-point net approval rating). The Labour Party, led by the reassuringly dull Keir Starmer, surged to a 30-point lead. In a single act of folly, Truss had destroyed her premiership and her party’s reputation while resurrecting Labour’s, which had only just been recovering from its own bout of insanity under Jeremy Corbyn.
In a desperate scramble to save herself by reassuring the markets that Britain had not gone mad, Truss began abandoning bits of her “mini budget.” First went the decision—spectacularly unpopular at a time of runaway inflation squeezing everyone—to scrap the top rate of tax for those earning more than £150,000. Then she brought forward the date when the government would reveal how it was going to pay for all its tax cuts, which created the obvious concern that a fresh round of austerity was on its way. And then, today, she went the whole hog, sacking her chancellor and abandoning even more of her plan.
In a single act of stupidity, Truss managed to blow up Johnson’s markedly redistributive election-winning platform—and therefore his coalition, which included disaffected Labour voters from the poorer north of England. Instead of spending more on public services, Truss detonated an economic bomb under the middle classes—first, by lifting the cap on bankers’ bonuses and cutting taxes for the rich, and then, faced with market turmoil, by scrambling around for new spending cuts. It would be hard to design a more catastrophic act of political self-immolation.