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5 September 2022

Why Liz Truss will damage the Conservatives’ record on the economy

For the first time in nearly 15 years, Labour are leading in the polls on the public finances.

By Freddie Hayward

What awaits Prime Minister Truss? A crisis inflating by the day. Part of the problem for Truss is that she’s spent the last two months talking, and making promises, to a tiny section of the public who share her right-wing economic views. That strategy is not going to survive contact with the reality of high office. As Andrew wrote in his cover story: “The politics, unless there is a U-turn, is profoundly dangerous. Whether it’s the National Insurance cut, income tax basic rate or thresholds, the planned emergency Budget so far seems to leave out the people most in need and provide too little for the rest.”

The speed with which Truss can pivot from buttering up the membership to supporting people in need will define her first few months in office. If she stays in campaign mode, as Andrew writes, the politics are dangerous. During the leadership hustings, Truss promised no more tax rises, meaning no new windfall tax on the profits of oil and gas companies. If that’s the case, then all her tax cuts combined with the extra support the government will need to provide mean borrowing is going to increase. That could mean the government breaks its own fiscal rules: state debt should be falling by 2024-5.

All of which further undermines the Conservatives’ reputation on the economy. Ben has a great chart showing that Labour leads the Tories on managing the economy for the first time in nearly 15 years. Starmer’s concerted effort to come across as moderate on the economy seems to be paying dividends. A wise move: as Ben notes, in not one election in the past 30 years has the party that has led on the economy lost.

[See also: Liz Truss has no moral right to be prime minister]

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