After four weeks of economic hell, the penny has finally dropped for the Tories. Nobody wants their Brexit wet dream of a minimal tax, low-regulation casino economy. And they don’t want the ideologues who championed it, either.
So it was that the brash, overconfident Kwasi Kwarteng got off his overnight flight after a premature dash from an IMF meeting in New York to be promptly thrown under a bus — sacked by Liz Truss as she desperately tried to keep her job by nobly sacrificing his.
After weeks of watching the pound fall, mortgage rates spiral, markets bet against Britain and international financial institutions express horror at the madness of a once stable economy, even this most impervious prime minister could no longer explain away the damage unleashed by her short-lived chancellor.
She followed his sacking with U-turns on the so-called “mini budget” that seemed to impoverish all but the richest in the country with its unfunded tax cuts. One measure was to reinstate the rise in corporation tax envisaged by her leadership rival, Rishi Sunak, overturning a signature policy for her trickle-down economics masterplan – a thesis she clung onto even after it had been widely discredited.
This followed an earlier decision to scrap a proposed cut in the highest rate of income tax. In doing so she is effectively disavowing the libertarian Brexiteer economics to which both she and “Kami-Kwasi” Kwarteng had long sworn allegiance. With the relatively lefty Jeremy Hunt coming in to replace Kwarteng, this is an astonishingly swift retreat from all the beliefs they promised to defend until the very end.
Nevertheless, she dug in with the obstinate rhetoric of a “women not for turning”, denying the reality of her situation and emphasising in a news conference that while the method of delivery might have to change, her commitment to their inchoate growth plan remained.
“The way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline,” she admitted, shortly after Kwarteng’s exit. But she insisted that “the mission remains the same. We do need to raise our country’s economic growth levels. We do need to deliver for people across the country.”
“We will get through this storm and we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come,” she added, in a performance that failed to convince anyone but the absolute diehards that she should remain in place to “deliver what the country needs.”
Everyone, from senior Conservatives to opposition figures, was unimpressed, some saying that this outing made her position even worse.
“Changing the Chancellor doesn’t undo the damage made in Downing Street”, said Keir Starmer. “Liz Truss’ reckless approach has crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage. We need a change of government.”
The unrepentant Truss, trying to cling on regardless, made sure she included in her statement the usual cringeworthy nod to her childhood, which she pretends was an ordeal of deprivation and a triumph over adversity, using the way she was “let down” – in her heroine Margaret Thatcher’s Britain, of all things – as a point of reference for her economic beliefs in aspiration. “I am not prepared to accept that for our country.”
The whole sorry mess was clear enough in the horrific and hilariously unhinged 2012 pamphlet cheesily entitled “Britannia Unchained”, which damned British workers for laziness and was full of praise for deregulation, tax cutting, Brazilian Favela and Indian slum economics, buccaneering, Dubai-level concern for workers’ welfare and a love of free economic zones that undercut the regular economy.
But then Truss, who seamlessly went from LibDem to Tory, Remainer to ultra-Brexiteer, is nothing if not a shapeshifter, moving positions with ease when her continued career depends upon it. With anonymous “senior Tories” saying they are planning to call for her to resign next week and calls for a new leadership – and even general election – growing stronger, she is now in survival mode. So goodbye, Kwasi.
Even the man considered her strongest political ally can bite the dust as he is made to carry the can for trying to use the British economy to experiment with their untested economic fantasies of a model for Singapore-on-Thames that didn’t even exist in Singapore – itself not libertarian but interventionist.
In a sign that the Brexit libertarian economic plan is due an obituary – along with Truss’s prime ministerial career – was a tweet from Ryan Bourne, the former head of public affairs at the rightwing Institute for Economic Affairs, which has been credited with “incubating” the Truss-Kwarteng economic ethos.
“I’m sorry to say that the honourable path from here would be for @trussliz to resign. The Prime Minister was culpable for not making some offsetting fiscal adjustments alongside her trailed tax cuts. The Tory party have since closed off any other route to letting her maintain those core pledges,” he wrote. “There is no point being in position but not in power. Her backbench MPs are forcing her to consolidate the public finances via means antithetical to her economic ideas. She should let the social democrats have their party back.”
By the time Kwarteng was shown the door, to be replaced by Jeremy Hunt, he had become the most unpopular chancellor in nearly half a century, with a net rating of -53 after barely six weeks in the job, according to an Ipsos survey for the Evening Standard. With 38 days in the Treasury, he became the second shortest serving chancellor in post-war British history – behind only Iain Macleod, who died on the job after 30 days in office. This was even shorter than Nadhim Zawahi’s caretaker chancellorship, when he was appointed by Johnson after everybody else resigned.
Her Greenwich neighbour and close friend hadn’t been much of an asset for Truss. As she wielded the axe, an Ipsos poll found she had the lowest ever recorded level of public satisfaction for a UK prime minister – a net -51 after mere weeks, which is even worse than Boris Johnson’s lowest score of -46.
Kwarteng came in with a swagger, but he left in humiliation. His panic dash back from an IMF meeting in New York overnight to his political execution in London was eagerly followed via flight trackers, Tweets from fellow passengers and videos filmed as he came to land – appropriately after his plane had performed several u-turns over Heathrow.
It recalled the tracking of Priti Patel who was sacked by Theresa May for unauthorised meetings with Israeli politicians, but even more so that of then-premier James Callaghan returning from a summit conference in the tropics as the UK struggled under the Winter of Discontent. After he was castigated for not taking the economic crisis in 1970s Britain seriously enough, Callaghan lost the election that ushered in 18 years of Tory rule.
Will this also be the beginning of a similar end to an era, triggered by the flight of a chancellor as his premier dodges the bullet? After 12 years in government, having sacked some of its most moderate politicians and used up the less bad of the political minnows and unsuitables in previous cabinets, what have the Conservatives got left?
It’s a worry that Kwarteng, for all his faults, was considered a heavyweight in a government where another great office of state, the Home Office, is peopled by the casually cruel loose cannon, Suella Braverman.
One thing they all seemed to have in common was a blithe arrogance that Kwarteng possessed in extremis. As he packs his bags, he is probably still sneering at the venerable economic institutions who criticised him and the financial markets that crashed the pound and forced up interest rates as a response – his miniature tenure has been nothing if not cocksure.
He refused to take advice, and one of his first acts in the job was to sack the top civil servant in the Treasury. He dealt another blow to economic orthodoxy – also known as rational, evidence-based behaviour – by refusing to let anyone mark his homework, preventing the Office for Budget responsibility publishing its no doubt damning conclusions. Something that significantly harmed the country’s economic credibility and made the ensuing lack of trust inevitable.
Kwarteng clearly thought that people would go along with his strange decisions just because he happened to be the one making them. Those who know him have spoken of his tendency to bluster away any questioning of his views, suggesting they “don’t waste time” with such lower order thinking. He has often been described as extremely “clever” by friends and foes, some even speculating that his economic plans spooked the markets and other politicians because his ideas were too clever for mere mortals. Sure.
His famed intelligence certainly doesn’t seem to have been reflected in his brutally short career under Truss. The best that can be said for him is that his self-belief led to many blind spots. It’s also not mentioned enough that his Oxbridge and Ivy League educational credentials were not for economics, even though he professes to be a superior sort of expert. He achieved a classics and history degree from Trinity College, Cambridge, before going to Harvard as a Kennedy Scholar. Back at Cambridge, he earned a PhD in economic history with a thesis studying England’s 17th-century coinage crisis.
The humanities education clearly didn’t help with the emotional intelligence side of things either, to judge from his entire public persona, but particularly the way he conducted himself at the Queen’s funeral – speaking on the phone and laughing as everyone else was united in solemn mourning.
In the same vein, Truss’s Oxford maths degree may have made her a whizz at mental arithmetic – she has been known to subject cabinet ministers and aides to quickfire quizzes – but it seems she can neither add up the numbers on Kwarteng’s spreadsheet nor make sense of the consequences they have in the real world of the voters whose support she needs.
This does not augur well for whatever future the Truss government still might have. Has she read the writing on the wall? Even when she reversed the 45% cut in income tax, she indicated that she might revisit this idea later. She appears so ideologically attached to the Britannia Unchained creed that she even apparently alarmed Kwarteng with her insistence on unlimited free zones, which threatens to turn the entire country into emerging-market level areas of low regulations and planning free-for all.
Still, whatever Truss still believes, it’s hard to see how she can get any of these ideas through now, with her partner in crime forced out of his job. It raises the question: “What is she actually for?” And given the public’s and the markets’ responses to the Truss-Kwarteng economic experiment, it poses a bigger one: “If none of you like this, what was Brexit actually for?”