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Editorial: Truss faces calls to sack Kwarteng as the damage of his neoliberal zealotry spreads

NEW prime ministers normally enjoy a bounce in the opinion polls. Not Liz Truss.

Rather, her ascent has only led to a polling descent, like a bungee jump with no rebound.

So bad is it that, less than a month into her premiership, speculation about an early end to her tenancy in Downing Street has already started. At very least, Tory MPs are telling her to sack manic Chancellor Kwasi Kwarteng as the price of saving her leadership.

It may seem incredible that the dysfunctional Conservative Party should be contemplating another leadership election so soon after the torment of the last one.

But it is no less incredible than the economic strategy Truss and Kwarteng are attempting to force on the country.

For a Budget, mini or otherwise, to — within a few days — paralyse the housing market, bring the pensions industry to the point of collapse and take the pound to a historic low, is a mark not just of the ineptitude of the Tory right but of the crippling weaknesses of British capitalism.

So much for Singapore-on-the-Thames, the low-wage, low-tax, deregulated neoliberal nirvana which a faction of Conservatives saw as the realisation of the promise of Brexit, although it only animated a small minority of those who voted to leave the European Union.

Truss’s central mistake, at least as far as her critics in the Bank of England and the City are concerned, is that she forgets that Britain is not the US.

The latter can run huge deficits without short-term damage because of the strength of the dollar as a global reserve currency. The de-dollarisation of the world economy will surely occur, but that time is not now.

British capitalism, on the other hand, is evidently broken and international speculators are going to run a mile from a currency at the mercy of incompetent ideologues.

Much as speculators may like tax cuts, they dislike ballooning deficits still more. Truss is the victim of her unwillingness to make the rich or corporations pay for resolving the crisis.

Had she met at least part of the bill for curbing fuel prices with a windfall tax on energy companies, it would have reassured the bankers. But business profits came first.

Stopping sterling’s death spiral risks aggravating other problems. The Bank of England’s emergency bond-buying programme to stop mass pensions insolvency could stoke inflation, leading in turn to wage-cutting and inevitable resistance from organised workers, which the Tories propose to meet with renewed anti-union repression.

And Kwarteng will now move to balance the books through spending cuts, armaments aside, which will plunge much of austerity-ravaged Britain deeper into social immiseration.

Underlying this is 12 years of stagnation and slumping productivity. Investment in infrastructure, public services and skills are the immediate answer to that, not tax cuts and the wild political zigzagging which has become a Tory speciality.

With the bond market on one side and militant trade unionism on the other, Truss and Kwarteng are on a “charge of the lightweight brigade.”

Experience shows that the loss of a reputation for economic competence tends to be politically terminal.

Keir Starmer is the undeserved beneficiary of this. He has the Tory Party membership to thank for Labour’s 17 per cent poll lead. It was their decision to hand government over to the candidate Labour wanted, a sub-Thatcherite fanatic, rather than any initiative on his part that has provided the boost.

He is opposed to the sort of radicalism that could address the crisis in working people’s interests. So, he may be the next leader to find out that British capitalism doesn’t do bounces any more.


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