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Monday, June 17, 2024

Under-fire UK PM Truss fails to calm markets with growth pledge

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Prime Minister Liz Truss vowed to steer the UK “through the tempest” as she closed her party’s tumultuous annual conference on Wednesday, making an unapologetic pitch for economic “growth, growth, growth”.

Since succeeding Boris Johnson, Truss has alienated voters, financial markets and many in the ruling Conservative party with a crash programme of debt-fuelled tax cuts to boost Britain’s stagnant economy.

But she argued in her speech that the status quo was not an option, despite the botched rollout of her fiscal plan leading to a humiliating U-turn on a pledge to cut income tax for the highest earners.

“In these tough times, we need to step up,” she told delegates, taking aim at what she said was an “anti-growth coalition” holding back attempts to revive the economy.

“I’m determined to get Britain moving, to get us through the tempest and put us on a stronger footing as a nation,” she added, mentioning the word “growth” 27 times during the speech.

But her failure to flesh out her economic plan did not calm the jittery markets, and the pound slid 2.01 percent against the dollar, falling to as low as $1.1241. Early Thursday it traded at 1.1336.

“She may have hoped that her triple promise of growth would have calmed markets further but with nothing new to offer the table, her words have not had the desired effect so far,” said Susannah Streeter, an analyst at Hargreaves Landsdown.

Global ratings agency Fitch on Wednesday lowered its outlook for British government debt from stable to negative, warning of “a significant increase in fiscal deficits over the medium term”. 

– Protest –

Despite only being leader for exactly a month, Truss’s calamitous start, with a 10-day hiatus because of the death of Queen Elizabeth II, has already seen her fighting to keep her job.

Former minister Grant Shapps, who supported Truss’s leadership rival Rishi Sunak, said she could face a no-confidence vote by MPs if the keynote speech fails to start reviving the party’s dismal standing in opinion polls.

“In the end, I don’t think members of parliament, Conservatives, if they see the polls continue as they are, are going to sit on their hands,” he told Times Radio.

“A way would be found to make that change.”

The speech wasn’t without its hiccups, with Greenpeace protesters holding a banner saying “who voted for this?” until they were ejected.

Truss’s critics, including allies of Johnson, have accused her of lacking a national mandate for her unpopular reforms after she won the Tory leadership.

But she insisted Britain needed to “do things differently”, with no time for “more drift and delay”.

“Whenever there is change, there is disruption. Not everyone will be in favour. 

“But everyone will benefit from the result — a growing economy and a better future,” she said. 

– ‘Keep faith’ –

It remains to be seen whether the speech has the effect 10 Downing Street wants. 

Truss’s media interviews in the build-up to Wednesday focussed unrelentingly on the U-turn she and Chancellor of the Exchequer Kwasi Kwarteng were forced to stage on the signature element of their reform overhaul.

Cabinet splits emerged in Birmingham on indications that despite the impact of the crisis on the poor, the pair will next cut welfare benefits.

Truss denied she had lost control of her cabinet after putting on a show of unity with the beleaguered Kwarteng on a visit to a construction site in Birmingham on Tuesday.

But there was little team spirit on display from Home Secretary Suella Braverman, who accused party critics of seeking to stage a “coup” against Truss.

Dissident ringleader Michael Gove was one of Braverman’s targets. But he kept up his running criticism of Truss, stressing all Conservative MPs had been elected on Johnson’s manifesto of 2019.

“We’ve got to keep faith with what Boris wanted,” Gove said, underlining the point that Truss has yet to face the UK electorate herself.

But asked by reporters if Truss would survive beyond the end of the year, the former minister said: “Yes.”

Foreign minister James Cleverly also distanced himself from Braverman’s comments, though he did urge colleagues to air their disagreements in Cabinet.

Opinion polls have shown the main opposition Labour party breaching 50 percent as the Tories slump under Truss, fraying nerves in Birmingham over the four days of the conference.

“Polls do move up and down,” Kwarteng said Tuesday, stressing the two years remaining to the next election was an “eternity in politics”. 


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