Liz Truss’s reversal is a humiliation. The prime minister has not done enough to restore confidence in Britain’s finances or her own premiership
. Liz Truss started her premiership with a mad dash for growth. She continues to insist that boosting Britain’s growth rate is her mission. But whatever remains of her time in office is now focused on a different goal: restoring the faith of the bond markets in Britain.
Ms Truss’s reversal is a humiliation. She had spent the Conservative Party leadership campaign promising to abandon the planned rise in corporation tax. She brushed aside warnings from Rishi Sunak, her rival, that her plans for unfunded tax cuts represented a dangerous “fairy tale” which would stoke inflation. In the end the fiscal statement on September 23rd included cuts worth £45bn , an even more lavish giveaway than the one she had dangled during the contest.
Yet this is insufficient to get the government out of a fiscal hole it has largely dug for itself. Prior to today’s statement, Carl Emmerson and Isabel Stockton of the Institute for Fiscal Studies, a think-tank, said borrowing would need to fall by around £62bn in 2026-27 to meet the debt target. Having reversed course on taxes twice , a little over half of Ms Truss’s original tax cuts remain.
Investors are meant to wait until October 31st to hear from Mr Hunt how he plans to make the sums add up. To jangle nerves further, an emergency bond-buying programme by the Bank of England, designed to stop fire sales of pension-fund assets that had been set in train by Mr Kwarteng’s budget, came to a close soon after Ms Truss had spoken.
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