Photo courtesy of CNN
On September 6, Conservative Party member Liz Truss became the third female Prime Minister of the United Kingdom. During her first month on the job, UK markets lost an estimated value of $500 billion. But it doesn’t end there. There’s reason to believe that the flubs of the Truss administration will continue to worsen the British political and economic climate and further divide an already troubled nation.
Similar to the United States, two primary parties share the majority of parliamentary seats– the Conservative Party and the Labour Party. After former Prime Minister Boris Johnson stepped down, Truss faced Rishi Sunak, a former chancellor and fellow member of the Conservative Party, in gaining the premiership. Voted in by fellow party members, Truss won by 21,000 votes, approximately a third more than her competitor.
Truss, a former leader of Oxford University’s Liberal Democrat society, has shed her past affiliation with the Labour Party. As the leader of the Tories, Truss has taken a conservative stance on many issues, causing a downturn in the United Kingdom’s economy.
The $500 billion loss in UK markets and the pound’s fall to a new all-time low stem from her unsuccessful new measures. Amidst high inflation rates, Truss implemented a tax reform plan increasing mortgage rates, mainly benefiting the rich. Soon after, Truss released a new plan to eliminate the highest tax bracket, meaning 31 million of the UK’s highest earners would pay considerably less to the government.
Arguing that cutting taxes will spur business growth, innovation, and more, Truss has remained adamant that her measures would eventually work. However, Deputy First Minister John Swinney and Finance Ministers from Wales and Northern Ireland have dubbed the plan “a huge gamble for the UK economy.”
Though Truss failed to pass her policy, since the announcement of these measures, investors have ditched government bonds, leading to a collapse in the pound. Worth about 1.04 American dollars a couple of weeks ago, the pound sterling lost 5% of its value in just a few days. This spiral led to an intervention by the Bank of England, hoping to decrease “dysfunction” and “restore market functioning.” This trend is likely to continue.
Liz Truss seems to be channeling the policies of Margaret Thatcher, the first female Prime Minister of the United Kingdom. For the vast majority of her term, Thatcher was loved by the public; it was only at the end of her tenure that people felt otherwise; however, Truss falls short of the economic gains Thatcher capitalized on. Since the beginning of Truss’s term, it has been clear that she has failed to support the British people.
Through her attempts to pass a meaningful proposal, Liz Truss has undermined her legitimacy and authority in the eyes of the British public — as well as in the eyes of far too many economists. In the years to come, though, I hope she improves for the sake of my country. I fear that her leadership will only drive Britain further into financial ruin.
