Liz Truss’s first weeks as British Prime Minister have been marked by crisis. She had been out of work for just 48 hours when news broke that Queen Elizabeth II had died, putting the country in a state of official mourning and delaying the official launch of Britain’s Truss plan.
With that official mourning period over last Monday, her government unleashed a wave of radical policy, culminating on Friday with the announcement of £45 billion ($48 billion) in tax cuts. The measures include scrapping the top rate paid by the highest incomes, in adjustments that will benefit the wealthy far more than millions of lower-income people.
The logic, according to the Truss government, is that cutting personal and corporate taxes will trigger an investment boom and boost the UK economy.
In an interview with CNN’s Jake Tapper last week, Truss defended her economic plans by saying that her administration “encouraged companies to invest and we also help ordinary people with their taxes.”
UK PM defends tax cuts as pound plummets
But Truss’ plans seem to backfire almost immediately. The pound fell to its lowest level in nearly four decades on Monday, reaching near parity with the dollar at one point. It seems very likely that the Bank of England will raise interest rates, making repayments more difficult for those lucky enough to have a mortgage, while those seeking mortgages are already seeing products being removed by banks.
On Wednesday, the Bank of England announced it would buy UK government bonds in an effort to “restore orderly market conditions” and avoid “malfunctioning” after the austerity and subsequent plunge in the pound.
The International Monetary Fund (IMF) issued a rare reprimand against a developed country on Tuesday evening, criticizing Britain’s tax-cutting plans and saying they are “likely to increase inequality”.
The chaos could not have come at a better time for the official opposition Labor party, which held its annual conference in Liverpool this week.
Going into the conference, Labor enjoyed polls it has not seen since the days of the last Labor Prime Minister to win a general election, Tony Blair.
The Labor Party has suffered badly since it lost power in 2010. The previous two leaders have struggled with their personal credibility on a number of issues, from the economy to security.
The party’s last leader, Jeremy Corbyn, came from the far-left party. He had ties to known extremists in the past, was against NATO, shared platforms with anti-Semites, and generally stood on the fringes of politics for decades.
When his successor, Keir Starmer, took the helm in 2020, he was taught wisdom that his job was to remove Corbyn’s influence from the party and then hand it over to a new leader, probably closer to 2030 than the next scheduled general election in 2024.
This week in Liverpool, however, Starmer’s Labor looked legit as a waiting government. It is nothing short of remarkable considering that less than a year ago Boris Johnson looked like the undisputed champion of British politics.
But after scandals lowered his premiership and Conservative approval ratings, the unassuming Starmer, a sweet-natured lawyer with a smart haircut and low-key suits, really looks like he could become the UK’s next prime minister.
In the two years of his leadership, Starmer has managed to silence many of the elements of his party that attracted Corbyn. It has gone from being a home for far-left radicals to a party whose conference this week attracted corporate lobbyists who were only too happy to fund events and stand shoulder to shoulder with the potential next government.
And after years of accusations with Corbyn in charge that Labor was somehow anti-British, this year’s conference kicked off with delegates singing the national anthem.
The people around Starmer temper their optimism. The Labor Party has previously smelled of power, but was disappointed when the next general election came. The UK, and in particular England, is a traditionally conservative country. Previous Labor governments gained power largely thanks to Scottish support.
That has all but faded since the 2014 independence referendum, in which Scotland voted to remain in the UK by a margin of 55% to 45%. As a result, nearly half of Scots were dissatisfied and supported the pro-independence Scottish National Party.
The PvdA also has shape for making unforced mistakes. While this year’s conference went largely without a hitch, there was one near-crisis to address.
On Tuesday, a video surfaced of a Labor MP calling the conservative finance minister, Chancellor Kwasi Kwarteng, “superficially” black. The MP, Rupa Huq, had her party whip removed almost immediately, meaning she has been expelled from the party and now sits as an independent. Huq later tweeted that she had apologized to Kwarteng for comments she described as “poorly judged.”
And Labor Party members are well aware that the Conservative Party plays the political game better than most. The term “natural ruling party” may seem strange given the chaos currently going on around Truss, but conservatives like to win at almost any cost.
None of this, however, offers much consolation to Conservative MPs.
“Every problem we have now is our own. We look like reckless gamblers who only care about the people who can afford to lose the gamble,” a former Conservative minister told CNN on Wednesday morning.
Addressing the team around Truss, which is largely made up of libertarian conservatives, the former minister said: “We have made the mistake of thinking that things that go well in free market think tanks also go well in the free market. ”
Despite things not looking great for Truss, there is fear in Labor circles that the current polls are a reflection of Conservative disapproval rather than enthusiasm for Labour. Many still doubt that Starmer really has the power of personality to win enough voters to completely defeat the Conservatives in the next election.
That caution could stem from a reluctance to get ahead of things. And their doubts about Starmer could be the same reason that some Conservatives are quietly optimistic that Truss has more personal content than her Labor rival and could simply overwhelm him in the future.
There is no denying that expectations in British politics have shifted this week. For the first time in years, it is undeniable that Labor will lose the next election.