Britain’s shortest prime minister Liz Truss blames economic ‘orthodoxy’ for collapse

LONDON (Reuters) – Former British Prime Minister Liz Truss on Sunday blamed economic “orthodoxy” in the UK’s Treasury, elsewhere and parts of the ruling Conservative Party for derailing her premiership and “growth plan.”

Truss’ tenure was cut short last year after her largely unfunded mini-budget and tax cuts pushed up borrowing costs and mortgage rates, pushing the pound down and damaging Britain’s reputation for financial stability.

In an op-ed for the Sunday Telegraph about her first major foray into politics since her premiership came to an abrupt end after just over six tumultuous weeks in office, Truss said she thought her recipe for Britain by cutting taxes and lifting some rules was the right one.

But she didn’t succeed, she wrote, because she underestimated the “bundle of vested interests” and orthodoxy.

“I am not claiming to be innocent of what happened, but in fact, a very powerful economic establishment, in the absence of political support, did not give me a real chance to pursue my policy,” she wrote.

“When I came to Downing Street, I assumed that my mandate would be respected and accepted. How wrong I was. Although I expected resistance to my program from the system, I underestimated its magnitude.

She blamed the backlash not only on what she called the economic establishment’s left-wing orthodoxy, but also on liability-led investment (LDI), which pension funds use to cover their liabilities. LDI found itself at the center of market turmoil after its mini-budget.

Truss also said she underestimated “resistance within the Conservative Parliamentary Party towards a transition to a less regulated economy with lower taxes” and a desire on the world stage to “restrict competition” between major economies.

“As I said on the campaign trail, I wanted to achieve growth… But that didn’t fit the gut feeling of the Treasury (Treasury Department) or the broader orthodox economic ecosystem.”

The story goes on

Grant Shapps, the business minister, said everyone wants tax cuts, but Prime Minister Rishi Sunak’s government should have focused primarily on reducing debt, lowering inflation and boosting growth.

The British opposition Labor Party said it was time for a change of government.

“The Conservatives have ruined the economy, crashed the pound, jeopardized pensions and forced workers to pay with higher mortgages for years to come,” said Rachel Reeves, Labor’s head of financial policy.

“After 13 years of low growth, low wages and higher taxes under the Tories, only Labor is offering leadership and ideas to fix our economy and make it grow.”

(Reporting by Elizabeth Piper; editing by Elaine Hardcastle)

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