Liz Truss holds the record as the shortest-serving Prime Minister in British history. Her tenure lasted just 45 days, a period marked by economic turmoil, political instability, and a dramatic loss of confidence from her own party. Truss’s downfall was primarily driven by the disastrous effects of her economic policies, particularly her government’s mini-budget, which triggered market panic and deepened the UK’s financial crisis.
The Rise of Liz Truss
Before becoming Prime Minister, Liz Truss had served in multiple ministerial roles, including Foreign Secretary under Boris Johnson. She positioned herself as a staunch advocate of free-market policies and lower taxation, appealing to the Conservative Party’s right-wing faction. When Boris Johnson resigned in July 2022 following multiple scandals, Truss campaigned to succeed him, promising a bold economic agenda that emphasized tax cuts and deregulation.
She won the Conservative leadership race against Rishi Sunak, securing support from party members despite warnings from economic experts that her policies could have severe financial consequences. On September 6, 2022, she officially became the Prime Minister of the United Kingdom, taking over from Boris Johnson. However, within days, her administration would face a financial crisis that would prove fatal to her premiership.
The Mini-Budget Disaster
The turning point in Truss’s brief tenure was the mini-budget introduced by her Chancellor of the Exchequer, Kwasi Kwarteng, on September 23, 2022. The budget proposed sweeping tax cuts worth £45 billion, the biggest since 1972, without outlining how they would be funded. The most controversial aspects included:
- Scrapping the 45% tax rate for the highest earners.
- Cutting the basic rate of income tax from 20% to 19%.
- Canceling a planned rise in corporation tax from 19% to 25%.
- Reducing stamp duty to encourage home buying.
These policies were intended to spur economic growth by encouraging investment and spending. However, financial markets reacted negatively due to concerns over how the government would fund these tax cuts without corresponding spending reductions. Investors saw the plan as reckless, fearing that it would lead to increased government borrowing and higher inflation.
Market Turmoil and Public Backlash
The response from financial markets was swift and brutal. The value of the British pound plunged to a record low against the US dollar, falling to $1.03. The sharp decline reflected a lack of confidence in the UK government’s ability to manage public finances.
Bond markets also suffered, with government borrowing costs soaring. The Bank of England had to intervene to stabilize the economy, buying government bonds to prevent pension funds from collapsing. Mortgage rates increased, leading to higher costs for homeowners. The public, already struggling with a cost-of-living crisis, saw their financial security threatened further.
The mini-budget faced widespread criticism from economists, financial institutions, and international organizations, including the International Monetary Fund (IMF), which issued a rare rebuke, warning that the plan would likely worsen inflation and inequality.
Political Fallout and Party Rebellion
As economic conditions worsened, Truss’s leadership began to unravel. The backlash from within her own Conservative Party grew rapidly. Many MPs feared that the economic turmoil would damage their chances in future elections, especially since opinion polls showed Labour gaining a significant lead over the Conservatives.
To salvage her premiership, Truss took the drastic step of sacking Kwasi Kwarteng as Chancellor on October 14, 2022, replacing him with Jeremy Hunt, who quickly reversed most of the mini-budget’s key tax cuts. However, the damage had already been done. The U-turns made her appear weak and indecisive, further eroding support within her party.
On October 19, 2022, Truss’s authority suffered another blow when Home Secretary Suella Braverman resigned, citing concerns over the government’s direction. A chaotic parliamentary vote on fracking later that day saw reports of bullying and physical confrontations among Conservative MPs, highlighting the deep divisions within the party.
The Resignation: A Record-Breaking Exit
By October 20, 2022, it was clear that Liz Truss could not continue as Prime Minister. In a brief statement outside 10 Downing Street, she announced her resignation, acknowledging that she had lost the confidence of her party. Her tenure lasted just 45 days, making her the shortest-serving Prime Minister in British history.
Truss’s resignation triggered another Conservative leadership contest, which saw Rishi Sunak emerge as the new Prime Minister on October 25, 2022. Sunak, who had warned about the dangers of Truss’s economic policies during the leadership race, immediately set about restoring financial stability.
Lessons from Truss’s Premiership
Liz Truss’s rapid downfall offers several important lessons about political leadership, economic policy, and crisis management:
- Economic Credibility Matters: Truss’s policies ignored economic fundamentals, leading to a loss of investor confidence. Governments must balance ambition with financial responsibility.
- Party Unity is Essential: Truss lacked strong support from her MPs, making it difficult for her to implement her agenda. A divided party can quickly bring down a leader.
- Public Trust is Crucial: Truss’s approval ratings plummeted as people felt the immediate impact of her policies on mortgages, pensions, and the cost of living. Without public support, even a democratically elected leader can struggle to govern effectively.
- Policy Execution is Key: While bold economic ideas can be appealing, they must be carefully planned and communicated to avoid market panic and political instability.
The Aftermath and Truss’s Political Future
Following her resignation, Truss returned to the backbenches as a Conservative MP. She continued to defend her economic approach, arguing that she was not given enough time to implement her growth plan. However, her credibility remains severely damaged within her party and among the public.
In contrast, Rishi Sunak has sought to restore financial stability and credibility, focusing on fiscal discipline and cautious economic policies. Under his leadership, the Conservative Party has attempted to repair the damage done during Truss’s short tenure, though political challenges remain.
Conclusion
Liz Truss’s premiership will be remembered as a cautionary tale of political miscalculation and economic mismanagement. Her tenure, though brief, had profound consequences for the UK economy and the Conservative Party. The turbulence of her leadership highlighted the importance of sound financial planning, strong party support, and effective governance. While Truss’s ambitions were clear, her failure to execute them in a responsible and measured manner ultimately led to her historic downfall.
