(CN) — British Prime Minister Liz Truss is fighting for her political life following her bombshell sacking of Chancellor Kwasi Kwarteng on Friday.
The chancellor — the second most powerful figure in the U.K. government and a close ally of Truss — was dropped by the prime minister after only 38 days in the post, following a devastating market reaction to his announcement of wide-ranging and unfunded tax cuts in a so-called "mini-budget" last month.
Alongside the sacking, Truss has announced a reversal of her plan to cancel a rise in corporation tax — a huge deviation from her flagship tax-cutting agenda. It is the second major part of the mini-budget reversed after a tax cut for high earners was scrapped last week.
Truss is likely hoping that Kwarteng’s removal will restore some of her rapidly draining political authority as she abandons the economic philosophy that won her the leadership of the governing Conservative Party only last month.
The policy U-turn that Truss is performing puts her in a perilous position. It signals the evaporation of her favored Thatcherite economic agenda and demonstrates that she does not have the support of her own party in parliament.
Despite possessing a large parliamentary majority of 70, it appears that Truss cannot command sufficient confidence among MPs in her ability or policies. The result is that the government is losing control of political developments.
A press conference on Friday held to stabilize her position instead added to her insecurity. Truss was visibly nervous, and her performance was widely seen as unconvincing.
"It is clear that parts of our mini-budget went further and faster than markets were expecting," Truss said during the conference. "So the way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline."
She did not accept fault for the course events in recent weeks or explain on what basis she had sacked the chancellor. She also failed to answer questions from journalists asking whether her position was tenable before abruptly ending the event to the audible dismay of the gathered media.
Conservative MPs are reportedly reaching a consensus that Truss needs to be removed from office less than seven weeks after she took up the post. Any imminent removal would make her premiership the shortest in more than 300 years of British politics by a comfortable margin. It would also create significant pressure for a general election to be called.
A general election would spell disaster for the Conservative Party, which has collapsed to historic lows in polls. But equally, the party’s chances of recovering their polling slump appeared doomed with Truss in charge.
With a 16% approval rating, Truss is now the most unpopular prime minister in British polling history. In the event of an election, polling suggests the opposition Labour Party should secure a historic landslide victory.
Unsurprisingly Labour, along with other opposition parties, including the Liberal Democrats and the Scottish National Party, is calling for an urgent election. Labour leader Keir Starmer described the government as “completely at the end of the road.”
“Their party is completely exhausted and clapped out,” Starmer continued. “It has got no ideas, it can’t face the future and it has left the U.K. in a defensive crouch where we are not facing the challenges of the future.”
Scotland’s First Minister Nicola Sturgeon has echoed his statement, adding that Truss had “trashed the economy and heaped misery on people who were already struggling with a cost of living crisis” and stating that she was “a lame duck prime minister.”
Parliament will be debating a motion for an early general election on Monday — a debate triggered by a public petition signed by more than 600,000 people. Polling suggests that 61% of the British public believes there should be a general election.
Some reports suggest that Conservative MPs are discussing the possibility of urgently installing former Chancellor Rishi Sunak, Truss’s opponent in the recent leadership election, as prime minister.
Sunak frequently criticized Truss’s plans during the leadership contest as “fairytale economics." His position has largely been proven correct by the course of events, giving him greater credibility within the party.
MPs would have to fall behind him in unison to prevent another full-blown leadership contest. A quick coronation of Sunak may help to stave off demands for a general election.
In a last-gasp attempt to shore up her position among parliamentarians, Truss has appointed Jeremy Hunt as the new chancellor. Hunt is a twice-former Conservative leadership candidate who, in recent years, has positioned himself as a high-profile moderate in the party. As such, he comes from the opposite wing of the party to Truss and acts as an olive branch toward internal critics.
It is unclear what approach Hunt will take to try and calm the economic storm.
Truss has suggested there will be public spending reductions in order to fund her tax cuts, but has also told parliament that there won’t be. Other U-turns on tax cuts have been ruled out but are generally considered likely.
There is also suspicion that the mini-budget proposals will get abandoned. Hunt’s budget is scheduled for the end of October, but only if the government can survive for that long.
Hunt is the fourth chancellor in four months — a government position traditionally associated with relative longevity. The high turnover rate highlights the ongoing feeling of crisis in the UK’s governance, as well as the Conservative Party’s inability to forge a coherent long-term economic policy. Both are contributing to market instability that increases the cost of borrowing and is making fiscal policy harder to formulate.
It is a spiral of volatility, factionalism and indecision, which adds to a growing sense nationwide that the Conservatives have lost the ability to govern.
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