7 November 2022
When a train derails, everything goes very fast! And in the past three months, things have certainly moved very quickly in Britain, much to the chagrin of most British households and to the amused but sympathetic amazement of the rest of the world.
We can think that the train started to pick up speed in 2016, when the UK decided to leave the EU, and that it accelerated further when the departure took effect, in January 2021. The Covid pandemic did not help to turn the situation around, and with the war in Ukraine, the train reached a speed at which it would inevitably derail. He began doing so with Boris Johnson’s resignation in July, when more than 50 Tory ministers and MPs signaled they could no longer support him.
Over the next two months, Conservative MPs began selecting their new leader before appealing to the party’s 180,000 members to choose between the two finalists. After weeks of campaigning, a majority voted for Liz Truss, leaving Rishi Sunak in second place. As soon as Madame Truss had been asked to form a government, Queen Elizabeth died, after which the country went through a period of mourning, during which the business of government was suspended. Although she failed to win the support of a majority of her MPs in parliament, Mrs Truss assembled her government from close friends and supporters, a move unlikely to mend an already divided party. She promised the country to lower taxes, protect people from the cost of energy, promote “growth, growth, growth” and “keep our promises.” To realize these ambitions, she appointed a close friend, MP Kwasi Karteng, as Minister of Finance (Minister of Finance). He first removed the Ministry’s No. Energy, but without specifying how these measures would be financed; it promised further supply-side measures, mainly through deregulation of plans and rules inherited from EU membership. This budget left a gaping hole in the UK finances and the markets reacted accordingly, with the value of the British pound falling rapidly and the cost of government borrowing rising just as rapidly, mechanically increasing mortgage rates at a time when people were already facing a cost of living crisis with inflation running at around 10%.
Very quickly the train derailed. Liz Truss responded by sacking her Chancellor of the Exchequer (who had been nicknamed Kamikwase Karteng) and replacing him with an experienced centre-party MP who quickly reversed almost all the tax cuts. The markets stabilized but it was clear that Mrs Truss would not be in power for long. Soon after, with Labor leading the Tories by 30 points in the polls, she learned that she had lost the support of her MPs in Parliament, and in the process resigned as leader of his party and de facto, the Prime Minister’s office . A very abbreviated election process was put in place to allow the party to choose a new leader. Two candidates, including Boris Johnson, who was hoping for a turnaround following his sacking, failed to secure the necessary number of nominations to enter the race and Rishi Sunak was therefore declared the winner. The new king, Charles III, invited Sunak to form a government. The new Prime Minister has appointed ministers from all sides of the Conservative Party in the hope of uniting its various factions. So we now find in government ex-ministers from Johnson and Truss, Brexiteers (the Prime Minister is one), free marketers and the more left-leaning One Nation group. Worst represented in the new cabinet are the “Red Wall” MPs, those who entered parliament in the 2019 election landslide, winning former Labor strongholds in the North and Midlands. Sunak promised to put the country before the party (!) and ensure that it recovers from its economically and politically greatly deteriorated situation.
Parliamentary elections will take place in two years. Can Sunak turn the polls around and see his party survive what could have been a disaster if they had happened now? Given the tough decisions ahead of the government, including dealing with what Sunak himself calls a “serious economic crisis”, most commentators currently seem to suggest that the Tories could at best claw back some of the lost ground in the polls, but not maintain their majority. With a gap of £40bn in the national budget, the amended Finance Bill promised for November will include tax rises and cuts in public spending, likely to be evenly split. Neither is likely to be very popular given the current cost of living situation. With health almost on its knees, social services severely understaffed, education severely under-resourced and local public services already reduced to their bare minimum, it is hard to see where to cut outside of foreign aid and defence. Regardless of the cuts and the size of the tax increases, we can expect some opposition within the Conservative Party itself, but probably not of a nature to topple the government again. At the same time, the relationship with the EU is unresolved, especially with regard to the protocol on Northern Ireland. As talks continue between the two sides, no progress is expected for weeks or even months, although there are hopes that the improved relations seen during Truss’ tenure will continue.
Above all, countries and markets require political and economic stability from governments. Britain has suffered a long period of weak economic growth, political decline and, more recently, governmental incompetence, on a scale perhaps not seen since the Suez Crisis of 1956. It is all grain to grind for the political scientist , a source of amusement and amazement for foreign observers, but a disaster for the population and British businesses. For Sunak, his promise to restore stability may bring him some short-term gains, but in the longer term there are still many problems to solve and difficult decisions to make. At least the train is back on the tracks – let’s hope it stays there.
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