What has happened?
Truss took office after defeating Rishi Sunak in a long and bitter battle for leadership of the Conservative Party. Commentators remarked that Truss’s margin of victory, while considerable, was lower than enjoyed by previous incoming leaders. The crisis began when Kwasi Kwarteng, the finance minister and a close ally of Truss, unveiled his long-awaited mini-budget. It promised major tax cuts while also proposing to spend billions in supporting households who have seen energy bills shoot up due to the war in Ukraine. The plan was almost universally panned by experts for being economically unfeasible and a market crisis began to unfold. Investors dumped British government bonds, the pound collapsed and the Bank of England had to step in to stabilise the situation. Truss had to issue a humiliating reversal of government policy.
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What have the consequences been?
It has been a disaster for Truss. Her approval rating has dropped tremendously and most polls indicate that the opposition Labour Party will win a handsome victory in the general elections scheduled for 2024. Even among her own party, which has prided itself on its steady management of the economy, there are major questions surrounding her political ability to continue as the leader.
Truss’s precarious position was made clear during the recently concluded Conservative Party Conference. The reaction to her speech was lukewarm. Senior members of the government, including those in Cabinet, believe that there is little spirit left in the Conservative Party for a protracted fight after 12 years in office.
What will happen now?
The Conservative Party faces few good choices. It can struggle on with Truss at the helm despite grave misgivings in the party about her ability to lead. With the next elections slated for 2024, some hope that she may be able to turn things around. These supporters seem to be in a minority among Members of Parliament.
Another option is to remove Truss from the leadership. While this may appeal to some members of the party, it is likely to amplify concerns among the British public that the ruling Conservative Party has lost its way. Notably, former prime minister Boris Johnson and former chancellor of the exchequer Rishi Sunak stayed away from Truss’s disastrous Conservative Party Conference.
What can Truss do to save herself?
Truss has attempted to reassure her party and the country. She claims that easier access to housing, childcare and fast broadband remain key concerns for her. She has also promised to adhere to her party’s long-standing belief in lower taxes and a small state.
She will also hope that her energy price caps will prove popular with households. Should the coming winter prove cold and inflation remain high, Truss will face further popular backlash.
She will also be looking to the free trade agreement with India, set to be signed this month, to restore her dented reputation as a competent economic manager.
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