When Liz Truss was on a run to lead Britain this summer, an ally predicted her first weeks in office would be turbulent.
Few, however, were prepared for the magnitude of the noise and the fury—certainly not Truss himself.
In just six weeks, the prime minister’s libertarian economic policies have led to a financial crisis, emergency intervention by the central bank, multiple changes and the resignation of her finance minister.
Now Truss faces a mutiny within the ruling Conservative Party that has left her leadership hanging by a thread.
Conservative lawmaker Robert Halfon was furious on Sunday that the past few weeks had brought “one horror story after another.”
“The government has looked like libertarian jihadists and has treated the whole country like lab mice on which to conduct ultra, ultra-free market experiments,” he told Sky News.
It’s not like the party wasn’t warned. During the summer contest to lead the conservatives, Truss called himself a disruptor who would challenge economic “orthodoxy.”
She promised she would cut taxes and red tape, and spur Britain’s sluggish economy to grow.
Her rival, former head of the finance ministry Rishi Sunak, argued that immediate tax cuts would be reckless amid the economic shockwaves of the coronavirus pandemic and the war in Ukraine.
The 172,000 members of the Conservative Party – who are largely older and wealthy – favored Truss’s stimulating vision. She won 57% of the members’ vote to become leader of the ruling party on September 5.
The following day, she was named Prime Minister by Queen Elizabeth II in one of the monarch’s last acts before her death on September 8.
Truss’s first days in office were overshadowed by a period of national mourning for the Queen. On September 23, Treasury chief Kwasi Kwarteng announced the economic plan he and Truss had drawn up.
It included £45 billion ($50 billion) in tax cuts — including an income tax cut for the highest earners — without an accompanying assessment of how the government would pay for them.
Truss did what she and her allies said she would do. Libertarian think tank chief Mark Littlewood predicted there would be “fireworks” over the summer as the new prime minister pushed for economic reform with “absolutely breakneck speed”.
Still, the magnitude of the announcement surprised financial markets and political experts.
“Many of us wrongly expected her to spin after she won the leadership contest like many presidents do after winning the primaries,” said Tim Bale, a professor of politics at Queen Mary University of London. “But she didn’t. She really meant what she said.”
The pound fell to an all-time low against the US dollar and government borrowing costs skyrocketed.
The Bank of England was forced to intervene to buy government bonds and prevent the financial crisis from spreading to the wider economy.
The central bank also warned that interest rates will have to rise even faster than expected to curb inflation, which is around 10%, leaving millions of homeowners facing steep hikes in mortgage payments.
Jill Rutter, a senior fellow at the Institute for Government think tank, said Truss and Kwarteng have made a series of “casual mistakes” with their economic package.
“They shouldn’t have made their disdain for economic institutions so clear,” she said. “I think they could have listened to advice. And I think one of the things they did very wrong was to announce part of the package, the tax cuts… without the spending side of the equation. ”
As the negative reaction grew, Truss began to abandon pieces of the package in an effort to reassure her party and the markets. The tax cut for top earners was dumped at the Conservative Party’s annual conference in early October, when the party rioted.
It wasn’t enough. On Friday, Truss fired Kwarteng and replaced her longtime friend and ally with Jeremy Hunt, who served as health and foreign secretary in the conservative governments of David Cameron and Theresa May.
In a short, dismal press conference, the prime minister acknowledged that “parts of our mini-budget have gone further and faster than the markets expected”.
She reversed a planned corporate tax cut, another pillar of her economic plan, to “reassure the markets of our fiscal discipline.”
Truss is still nominally prime minister, but power in the government has shifted to Hunt, who has indicated he plans to tear up much of her remaining economic plan when he makes a medium-term budget statement on Oct. 31.
He has said tax increases and cuts in government spending are necessary to restore the government’s fiscal credibility.
Still, Hunt insisted on Sunday: “The Prime Minister is in charge.”
“She listened. She has changed. She’s been willing to do the hardest thing in politics, which is to turn things around,” Hunt told the BBC.
The Conservative Party still has a large majority in parliament and has – in theory – two years until national elections are to be held. Opinion polls suggest an election would spell defeat for the Tories, with the Labor Party gaining a large majority.
Conservative lawmakers are hesitant to replace their leader for the second time this year.
In July, the party forced out Prime Minister Boris Johnson, who led them to victory in 2019, as serial ethics scandals entangled his government.
Now many of them regret the buyer about his replacement.
Under party rules, Truss will be exempt from a leadership challenge for a year, but some conservative lawmakers believe she could be forced to resign if the party can agree on a successor.
Defeated rival Sunak, House of Commons leader Penny Mordaunt and popular Defense Secretary Ben Wallace are among the names listed as possible replacements. Johnson, who remains a legislator, also still has supporters.
Junior Treasury Secretary Andrew Griffith argued Sunday that Truss should be given a chance to try and restore order.
“This is a time when we need stability,” he told Sky News. “People at home just pull their hair out at the level of uncertainty. What they want is for a competent government to continue with (the) work.”