UK Truss triple promised growth, but markets seem to think different

By Al Mayadeen English
Source: Agencies + Al Mayadeen English
6 Oct 2022 09:12

UK Prime Minister Liz Truss defends her recent unpopular decisions as she promised to steer the British economy into growth.

UK PM Liz Truss

During her speech at the annual conference of the Conservative party, the British Prime Minister, Liz Truss, stressed that the current status of the economy is not an acceptable option, urging the "need to step up" during these "tough times".

Earlier on Monday, PM Truss made a "humiliating" U-turn on the top-rate tax cut decision included in the previously announced economic package (mini-budget), just one day after she announced being "absolutely committed" to it.

Infograph: Truss leads the race ahead of Sunak for the PM seat

Fitch agency for global ratings warned of "a significant increase in fiscal deficits over the medium term" on Wednesday, as its outlook for the UK debt was lowered from stable to negative.

The mini-budget that was revealed by the Chancellor of the Exchequer, Kwasi Kwareng, which included huge tax cuts funded by a significant increase in borrowing, led to a sharp slide in UK bonds and currency, where the Sterling hit a 41-year low against the dollar and an extremely negative reaction from the financial markets, which the PM is accused of totally ignoring when it came to making major economic decisions.

"I'm determined to get Britain moving, to get us through the tempest and put us on a stronger footing as a nation," Truss said during her speech as she vowed economic, "growth, growth, growth" while attacking the "anti-growth coalition", accusing them of weighing down initiatives that are aimed to revive the British economy.

Susannah Streeter, an analyst at Hargreaves Landsdown, commented on the PM's speech, saying that "she (PM Truss) 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," in reference to the market's negative reaction to Truss' announcement, where the British Pound fell by 2.01% against the USD reaching a $1.241 from a previous $1.1336.

The British PM has been in an ongoing fight to hold her job since reaching office nearly one month ago. The former chancellor of the Conservative party, Ken Clarke, labeled the Truss government to have initiated a “catastrophic start” (referring to the mini-budget plan), while a survey conducted by YouGov revealed that 51% of UK citizens believe that PM Truss should resign.

Chancellor Kwarteng commented on the results that "polls do move up and down," as he stated that the 2 years until the elections are an "eternity in politics."

Commenting on the current state of the Prime Minister's popularity, Former UK Transport Secretary, Grant Shapps, told Times Radio, "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," suggesting that Truss could face a no-confidence vote by the MPs and that "a way would be found to make that change," while allies of former PM Boris Johnson said she lacks a national mandate for her reforms that lack popularity.

Despite all criticism of her actions so far, Truss blamed the whole situation on differences in viewpoints, where she said that currently there isn't time for "more drift and delay" and that things must be done differently, arguing that "whenever there is change, there is disruption. Not everyone will be in favor."

"But everyone will benefit from the result, a growing economy and a better future," she stressed,

Watch here: People burn energy bills in the UK

Chancellor of the Exchequer Kwasi Kwarteng and PM Liz Truss preceded the Wednesday speech with a set of interviews focusing on her humiliating U-turn on the mini-budget, as splits in the cabinet surfaced in Birmingham that the two are preparing to cut welfare benefits despite the effects of the economic crisis on the poor. Truss responded by arranging a construction site visit with the beleaguered Kwarteng in a show of unity.

Home Secretary Suella Braverman warned that some critics of the party are aiming to arrange a "coup" against the PM. Dissident ringleader Michael Gove was considered to be one of the targets of Braverman's statement, however, he defended his position stating that "we've got to keep faith with what Boris wanted," as he underlined that all MPs of the Conservative party were elected on the manifesto of former PM Boris in 2019 and told reporters that he believes that Truss would stay in position beyond the end of the year.