After a grindlingly long race, Liz Truss has finally been named Prime Minister Boris Johnson’s successor. The new leader of the Conservative Party now has the unenviable task of steering the UK through a tough winter and beyond. Will she be able to hold the Tories together and keep the lights on? Bloomberg Opinion columnists Therese Raphael, Adrian Wooldridge and Marcus Ashworth discussed her prospects with Bobby Ghosh live on Twitter Spaces. Here’s a transcript, edited for clarity and length.
How did Liz Truss defeat the establishment’s favorite, former Chancellor of the Exchequer Rishi Sunak, to the job?
Adrian Wooldridge: Indeed, Rishi Sunak was the person who got the most votes amongst MPs. But from the beginning, Liz Truss did better in the race for the votes of the roughly 170,000 Conservative Party members who determine who finally wins. She did this by focusing relentlessly, but extremely successfully, on the sentiments of voters in the party membership.
She played on their prejudices: They want tax cuts; they didn’t like the degree of state expansion that went on during the COVID crisis; they like Boris Johnson. But while she won, she didn’t win overwhelmingly. She only got 57% of the vote and you have to see that in the context of the fact that Boris Johnson won by a higher percentage and Theresa May won even more resoundingly. So the party is divided and she has to try and put it back together.
Can Truss follow through on the promises of smaller government and lower taxes that she made during her campaign?
Therese Raphael: Let’s say first that her promises were very vague and delivered in very sweeping terms. The party is not in a position to have yet another leadership challenge before the next general election in a couple of years time. So she can face some grumbling from the backbenchers. Initially, she’s going to get fairly significant support because the party will be soon focused on ensuring that Labour leader Keir Starmer doesn’t make it into Number 10 at the next general election. To do that, they cannot afford another two years of in-fighting, but that’s not to say there wouldn’t be opposition to her.
Truss will face very early on a choice that will highlight some of the divisions within the party — the debate over the Northern Ireland Protocol, for example. Plus there’s a general public which doesn’t think very highly of her.
How have the markets reacted and what do they expect from Truss?
Marcus Ashworth: Markets are expecting a lot and it will have to be within the next week and a really clear, aggressive plan. Basically, what Liz Truss is going to do is unwind everything that Rishi Sunak did. It’s going to be about 4% of GDP — about 100 billion pounds ($115 billion) of stimulus phased over a few months.
She’s going to be, as she said in her acceptance speech, “conservative.” That means aggressively following the manifesto. The key is can she provide the means with which to do so if she’s going to cut taxes, provide support and cap energy prices all at the same time? She does have a great advantage that people haven’t really picked up on: There’s a lot of pent-up cash waiting for the moment to reinvest. There is a natural shortage of gilts actually caused by Sunak, who canceled about 100 billion pounds worth of issuance last October which the market’s never really recovered from.
AW: I would reemphasize the fact that this is an exceptionally fragile economy at the moment. People and the markets are very questioning about her abilities and overall policies. She needs to have some sort of momentum and as soon as she’s seen to falter, there could be very difficult consequences.
It seems like Truss is bringing back a kind of Reaganite or Thatcherite approach to the economy. She’s made it very clear that she sees three jobs: She wants to cut taxes, control inflation, and she wants a growth strategy. How does the sequencing of that work?
AW: The timing is absolutely vital and very strange because I could see how a policy of really igniting growth might make a certain amount of sense, but not in the middle of an energy crisis. There are two things that really confront the country at the moment. One is surging inflation and the other is the fact that many people, particularly many poorer people, won’t be able to afford their bills. Her policy of tax cuts and igniting growth, whatever the merits of that is in the long term, is not going to address those problems and may well make the problem of inflation worse. I wouldn’t call it Thatcherite at all. Thatcher raised taxes and was very concerned with balanced budgets. It’s Reaganite without all of the advantages of a giant economy with the reserve currency.
MA: I would agree with Adrian that it’s an early-Reaganite approach. However, I’m going to disagree with him on the economic effect. She said on Sunday that she’s not going to look through the lens of redistribution on everything, she needs to go for growth. I think she’s going to go at everything as hard as she possibly can. I also don’t think she will leave behind the poorest, far from it — we’re not just talking families here but businesses as well. She’s going to try and throw as big a blanket over this as she possibly can. We won’t necessarily see either recession or indeed inflation optically going on much higher than it is now.
The question is, at some point something has got to give and that’s going to be borrowing. There’s enough room, as long as the markets don’t take fright. Sterling is priced very cheap, the gilt market’s already moved. There is a way through this, but it will be fraught.
The majority of MPs voted didn’t vote for her. Will they now be hostile or faithful to the party?
AW: We have two years until the next election and the Conservative Party has a habit of trying very hard to win elections. It’d look very odd to try and destabilize your third prime minister in a row. However, she is, by temperament and not just by ideology, an extremist. She likes extreme solutions to problems and she takes the fact that she puts people’s back up as a source of pride rather than a warning. When she was a Liberal Democrat, as she was when she was an undergraduate student, she wanted to abolish the monarchy, for example.
We haven’t seen her cabinet announced, but the leaks so far suggest that she will have a very robust showing of right-wingers, including Suella Braverman as home secretary and Kwasi Kwarteng is set to be chancellor. Iain Duncan Smith may be coming back in a prominent role, probably running the House of Commons. Jacob Reese-Mogg might be business secretary. These are people who, with the exception of Kwarteng, one wouldn’t even imagine in the cabinet a few years ago because of the combination of their ideology and lack of personal qualities. I see this moment as the Corbynization of the Conservative party. Former Labour leader Jeremy Corbyn didn’t win a majority of MPs, but he did win votes from party members. So whether the majority of the Conservative party can put up with that in parliament for two more years I’d be very interested to see.
What can we expect from her in foreign policy terms?
TR: The simple answer to that is continuity. She was pretty decent as foreign secretary. She was strong on supporting the government of Volodymyr Zelenskiy. After the Russian invasion, she has stood up to Vladimir Putin quite publicly. She is also advocating an increase in defense spending to 3% of GDP.
But what we need to keep in mind is that the Ukraine coalition very much needs to be a coalition. It relies on a close relationship with Washington and on building and maintaining consensus with the European Union. Both of those things risk being undermined by the standoff in Northern Ireland. There is something very existential for the West about the war in Ukraine and so I don't think anything is going to stop Europe, Britain and the US talking on that. But her credibility internationally will depend in part on how she handles these early challenges and particularly on Northern Ireland.
For the final word, what’s your take on Boris Johnson’s legacy as prime minister?
MA: Boris Johnson cuts both ways. He’s clearly an accomplished performer and has an ability to change the dynamic, as we saw through the Brexit campaign and the ability to get a Brexit deal done with Europe. He won an election and then proceeded to essentially fail at the statecraft and ability to run a competent administration with very poor choice of advisors. That lost him the confidence of his colleagues.
That’s why Liz Truss is going to approach the political side of it quite differently. The media may find itself starved of the drama they’ve been able to enjoy so much under the Boris Johnson administration. Boris has got some strong points — he got the big things right — but he very much got the little things wrong.TR: He’s certainly occupied a great deal of my journalistic time over the last three years. It’s interesting that the latest YouGov poll shows that 55% of Britons think that Johnson was either poor or terrible, which is really damning public judgment at this point. But within his party, there is a very different view of him, among many. He reopened the question of what is conservatism for the country. He attracted Labour voters in the North and he stitched together a whopping electoral majority in 2019.
So now we have to see what happens, but I think one legacy in terms of vision that ought to be acknowledged is that Johnson identified the rebalancing of the UK economy — what he called “levelling up” — as the core deliverable for the Tories. That was the right policy to focus on and the government delivered a very interesting serious white paper setting out how that should be done. Unfortunately, things fell apart and he didn’t get very far in delivering it. There’s a lot left for Truss to do.AW: Boris Johnson is, unfortunately for the Conservative party, a British version of Donald Trump. He’s too toxic really to win over the country again, but he’s too big and popular with the party base to disappear. So he’ll be there all the time. He’ll probably get a column in which he will comment on a weekly basis on how his successor is doing. His loyal supporters within the Conservative party will be banging the table with enthusiasm about what he says.
Rishi Sunak is too good a person to disappear from the Conservative party, but he won’t have a role in Liz Truss’s cabinet. He’ll be there sitting as a very prominent and important back bencher. And if, as many of us suspect, the Truss experiment falls apart, there are two alternatives already there. The party will either go back to Rishi Sunak and his calm managerialism, or back for mad music and stronger wine to Boris Johnson. Both of them are a standing challenge to Liz Truss.
More From Bloomberg Opinion:
- Can Liz Truss Exceed Low Expectations? Thatcher Did: Therese Raphael
- The Stink of Britain’s Sewage: Therese Raphael
- As Gas Prices Soar, the UK Needs a Real Energy Plan: The Editors
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Bobby Ghosh is a Bloomberg Opinion columnist covering foreign affairs. Previously, he was editor in chief at Hindustan Times, managing editor at Quartz and international editor at Time.
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