The British government has pushed back against a surprise intervention by former prime minister Liz Truss, as she tries to launch a political comeback barely 15 weeks after resigning when her policies sent Britain’s financial stability into a tailspin.
Grant Shapps, the business secretary under her successor, Rishi Sunak, said the financial policies pursued during her ill-fated reign were “clearly not” correct. Reacting to an essay Ms Truss wrote for the Sunday Telegraph, he said he agreed with her that Britain should have lower taxes, but he implied she moved to cut them too soon at the start of her premiership.
“I completely agree with Liz’s instinct to have a lower-tax economy. We also know that if you do that before you’ve dealt with inflation and dealt with the debt, then you end up in difficulty. You can’t get the growth out of nowhere,” he said on Sophy Ridge’s Sunday morning show on Sky.
Later in the morning on the BBC, he told presenter Laura Kuenssberg he had seen it as his “national duty” to serve in Ms Truss’s cabinet as her government was beginning to collapse.
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Ms Truss resigned on October 20th making her 44-day premiership the shortest in British history. Financial markets were spooked by unfunded tax cuts in a mini budget announced by her chancellor of the exchequer, Kwasi Kwarteng, whom she then sacked. Britain’s pension fund system also almost collapsed after bond values plunged.
In her 4,000-word Telegraph essay, Ms Truss was defiant and insisted her push for a higher growth economy by cutting taxes was the right “diagnosis”. She offered no apology for sparking market turmoil.
She gave insight into her campaign to succeed Boris Johnson as prime minister. When he announced he was resigning, she was in Bali and she said a foreign minister from another country advised her to “get back home, woman, and start hustling”. She defeated Mr Sunak in a bruising campaign with enthusiastic support from Tory grassroots members.
She criticised Britain’s treasury department for inbuilt “pessimism and scepticism” about the economy’s growth potential and suggested she tried to short circuit its stranglehold on policy. But, she claimed, treasury officials failed to warn her about problems in the pension fund industry that caused much of the turmoil.
She also blamed the Conservative Party for a perceived failure since 2010 to properly argue for low-tax policies. Ms Truss admitted she “underestimated” market dynamics, but she also blamed a “left-wing financial establishment” for bringing her down.
Economist Danny Blanchflower, who previously sat on the Bank of England’s monetary policy committee, said her essay was the “most appalling nonsense I’ve ever read” and her policies represented “an economic delusion”.
Ms Truss will not be going away, however. She promised to make further arguments in “coming weeks and months”.
