Liz Truss and Kwasi Kwarteng have had a troubled few weeks since taking office
London (AFP) - British Prime Minister Liz Truss has had the shortest of political honeymoons since taking over from Boris Johnson.
Taking out the 10 days of mourning for Queen Elizabeth II, Truss had only a week in control of events before her political programme imploded, leading to the sacking of her finance minister.
“That is the shelf-life of a lettuce,” The Economist magazine commented this week.
- September 5 -
Truss wins a vote by Conservative party members by 81,326, against 60,399 for Johnson’s former finance minister Rishi Sunak.
Truss has a weak mandate to push through her economic reforms
As the new leader of the largest party in parliament, that makes her prime minister – with support from less than 0.2 percent of the UK electorate and only a minority of her own MPs.
The next day, she is confirmed as prime minister by the queen.
Despite her weak mandate, Truss purges all Sunak supporters from her new cabinet, and installs the like-minded Kwasi Kwarteng as chancellor of the exchequer.
- September 8 -
Truss unveils a costly scheme to cap household energy bills, in response to Russia’s invasion of Ukraine.
But the dramatic announcement is eclipsed by the queen’s death, which suspends all government business for 10 days.
- September 23 -
Kwarteng announces a “mini-budget” which details the price of the energy scheme -– £60 billion ($67 billion) over the next six months.
The unfunded tax-cutting mini-budget caused turmoil in financial markets over fears about rising government debt
But there are no measures to raise funds.
Instead, he announces massive new borrowing to pay for sweeping tax cuts – including for top-earners – along with scrapping a cap on bankers’ bonuses.
The announcement immediately draws political fire for being unfair. But the markets reserve the most stinging verdict in their response to the new borrowing – driving the pound down towards parity against the dollar.
Two days later, a Sunday, Kwarteng vows “more to come” on tax cuts. The next day, when markets reopen, the pound plumbs new depths.
The budget is dubbed “Kami-Kwasi” by media, which begin reporting tensions between Kwarteng and Truss, and deep disquiet among Tory MPs including cabinet ministers.
- September 28 -
With bond market turmoil placing British pension funds in jeopardy, the Bank of England announces a two-week programme to buy long-term UK bonds, capped initially at £65 billion, “to restore orderly market conditions”.
- September 29 -
Pollsters YouGov report a 33-point lead for the main opposition Labour party over the Tories –- its biggest margin since the heyday of former Labour prime minister Tony Blair in the late 1990s.
Other polls also point to electoral disaster for the Conservatives. But hours before his keynote speech at the party’s annual conference at the start of October, Kwarteng vows to “stay the course”.
- October 3 -
Kwarteng and Truss are forced into a humiliating U-turn as civil war engulfs the party conference, scrapping the planned cut in the top rate of income tax following hurried late-night talks.
Both Truss and Kwarteng had vowed to plough ahead with their proposals
In her own conference speech on October 5, Truss vows to pursue her “growth, growth, growth” agenda but fails to reassure party rebels and nervous markets.
UK government bond yields keep rising, inflicting more pain for UK households as mortgage rates surge.
- October 10 -
In another volte-face, Kwarteng reveals he will publish a medium-term fiscal plan alongside independent budget forecasts on October 31 –- Halloween –- rather than in late November as originally planned.
But on October 12, Truss rules out any cuts to public spending, even as she vows no further U-turns on the remaining tax cuts, compounding perceptions of a government in chaos.
- October 14 -
With markets still rattled and pressure piling on Truss, the prime minister fires Kwarteng after just 38 days in the role, further stoking rumours that her party was about to attempt her own ouster.
Former foreign minister Jeremy Hunt was appointed finance minister
Kwarteng defends the economic programme in a letter to Truss, insisting it was needed because “the status quo was simply not an option”.
In his place, she appoints former foreign minister Jeremy Hunt.