Opinion

UK: new prime minister and economic crisis

photo_camera Liz Truss

In the history of the United Kingdom, guarding the Great Seal was, for almost a thousand years, an exclusive privilege granted to men. In 2016, Liz Truss became Lord Chancellor, the first woman to hold such a high office, and in addition to guarding the Seal, she protected the independence of the courts. Six years on, Truss has now achieved another accolade: becoming her country's new prime minister. 

With a solid political career, Mary Elizabeth Truss, popularly known as Liz, won much of the consensus and backing of Conservative Party members during the anointing ceremony (5 September) of the successor to the rocky Boris Johnson. 

The British press had been tipping her for days as the favourite to replace her party colleague: Johnson was forced to resign last July after running out of support from his own Conservative co-religionists. 

Not that it was easy, but not too difficult either. Truss, 47, represents practically the continuity of the model applied by Johnson in the last three years in his relations with the European Union (EU), the special immigration policy, the hot deportations of illegal immigrants to Rwanda and the defence of British values over European interests.  

His direct opponent Rishi Sunak, the former Treasury Secretary and one of those responsible for the fall in Johnson's support, obtained 60,399 votes from Tory militants, while Truss - at the head of the Foreign Office - obtained 81,326 Tory votes. It was Sir Graham Brady, head of the 1922 Committee, who announced the new Prime Minister and leader of the Conservative Party. 

Born in Oxford, she studied philosophy, politics and economics at Merton College and practically from graduation (1996) she tried to break into the civil service and was an early member of the Conservative Party. Her first big break came in 2010 when she was elected MP for Norfolk. 

Truss knows the ins and outs of the British Parliament and civil service well, having had a career in a wide range of roles under the Tory governments of David Cameron, Theresa May and Boris Johnson.  

In recent years she has bent her thinking to the dominant line of the moment in government; she was initially an opponent of Brexit during the Cameron-led referendum, and then ended up supporting and working for its exit.  

Her youthful political thinking, initially with certain moderate left-wing overtones, has also mutated over the years to a more pragmatic and liberal form. 

Despite criticism at home and in the EU for the expulsions to Rwanda of migrants arriving by irregular routes and seeking asylum on British soil, Truss never spoke of reconsidering the programme as foreign secretary because she favours continuing to do so as a mechanism to curb the mafias and contain people's drive to reach British territory in this way.  

She did not give an inch in the face of pressure from human rights groups; indeed, Truss promised that if she became prime minister, she would extend the expulsions of irregular immigrants to other countries under the same formula as Rwanda, and mentioned, according to The Times, sending contingents of asylum seekers to Spain and Turkey. 

So far this year more than 15,000 irregular immigrants have arrived in the UK across the English Channel; for the deportations of people from Syria, Iraq, Afghanistan and Iran, the British government pays Rwanda 148 million dollars. 

There is a hard line inside London that wants to stop the waves of migration at any cost. In fact, it was the proposal of the then German chancellor, Angela Merkel, to share out quotas of Syrian refugees arriving on European soil after leaving their country in the midst of a violent civil war, which served as the trigger for the Brexit referendum. 

On 8 September 2015, Merkel asked the 28 EU member states to share the 800,000 asylum requests without limit; by 23 June 2016, the British decided at the ballot box whether to remain in or leave the EU, with the Leave vote winning with 17,410,742 votes (51.9%) of the votes cast.  

Everything changes to stay the same 

Among her professional CV, Truss has been Secretary of State for Justice (2016); then Chief Secretary to the Treasury (2017); under Johnson, Secretary of State for International Trade (2019) that same year, Minister for Women and Equalities and two years later she was appointed Foreign Secretary.  

She has not been able to avoid comparisons with Margaret Thatcher, who was prime minister from 1979 to 1990, the first woman to hold such a post and to do so for such a long period of time. From the Conservative Party there have been three women to occupy Downing Street: after Thatcher, Theresa May, from 13 July 2016 to 24 July 2019, and now it is Truss's turn. 

The legacy left by the red-haired Boris Johnson, described by some tabloids as "the worst of them all", is a chain of lies, sex scandals involving several of his government's politicians, disquiet and a moral crisis that must above all regain the confidence of the public in the midst of an economic crisis that is rapidly looming. People are having a hard time. 

While the change of government was taking place, the country was paralysed by a rail strike and a postal strike; this summer, the UK has seen a string of strikes that have been joined by dock workers, lawyers and refuse collectors. 

The news is not good: July's inflation of 10.1% is the worst in 40 years; the economy contracted 0.1% in the second quarter and real household spending fell 0.2% in June. 

Forecasts for the end of the year are grim: the Bank of England itself anticipates annual inflation of 13%, money is burning in the hands of workers undermining their purchasing power. There are more doomsayers such as Citigroup warning of 18% inflation. 

The British press has greeted the new tenant of 10 Downing Street with reproach and scepticism, fearful that she is a repeat of Johnson's mistakes and blunders, in a female version. 

The Daily Mirror headlined on its front page Now fix the Britain you broke and subtitled Truss has arrived laden with promises as did the other three Conservative prime ministers.  

The Daily Mail also carried the prime minister on its front page with some more positive encouragement: Together we can weather the storm; she tweeted the same on her @trussliz account in one of her first acts as new leader: "As your prime minister I am confident that together we can weather the storm, rebuild our economy and become the modern, bright Britain I know we can be. 

In her first speech outside the official residence, Truss stressed that she will focus all her efforts on three sectors that are sensitive at the moment: the economy, energy and the National Health Service (NHS), which she said she will give considerable support to. 

He did not mention Ukraine, a turning point that is generating serious tensions in British society, between those who believe it is time to stop this war and those who do not trust the intentions of the Russian dictator, Vladimir Putin, and agree to continue giving arms and money to Kiev. 

Indeed, it was surprising that Truss, after returning from his meeting in Balmoral with an ageing Queen Elizabeth II (he broke the tradition of giving her his blessing at Buckingham as he did with the other 14 prime ministers), immediately spoke to Volodymir Zelenski, Ukraine's president. This is a clear message to Putin, Johnson has gone, but she will not change her position of supporting the invaded nation. 

She tweeted: "Spoke with President @ZelenskyyUa tonight & reiterated our strong support for Ukrainian freedom & democracy. Russia's attempts to use energy as a weapon should not deter the West. Ukraine can depend on the UK's support in the long term'.

The following day, 7 September, he picked up the phone to greet US President Joe Biden and also tweeted: "This afternoon I spoke to @POTUS about working together as leaders of free democracies to address shared challenges, particularly the economic problems caused by Putin's war. We will build on UK-US ties by fostering our defence alliance through NATO and AUKUS". 

A few hours later he spoke via phone with Germany's Chancellor Olaf Scholz, and again reflected on Twitter: "Talked to @OlafScholz tonight about energy resilience in response to the challenges caused by Putin's illegal war. The UK and Germany are important economic partners and I look forward to working together on defence to defend democracy and freedom in Europe". 

A rosary of promises 

All economic forecasts point to the UK economy heading for a recession that could last a year - expected in 2023 - as the current progress of each economic quarter is revealing the slowdown in GDP.  

The International Monetary Fund (IMF) in its report of last July adjusted downwards the world GDP estimating a growth of 3.2% in 2022 and 2.9% in 2023; the expected world inflation would be 6.6% this year. For the UK, in particular, its likely scenario is GDP of 3.2% in 2022 and 0.5% in 2023. 

The situation is very particular in the British economy because it is experiencing a series of affectations in its production and supply chain, partly altered by Brexit, the natural flow of goods and services that it obtained under the EU umbrella is now a jumble of paperwork, bureaucracy and wasted time. Freighters themselves warn of the enormous problem of delivering orders from the EU bloc on time.  

Added to this anomaly is the disruption to supply chains due to the effects of the pandemic and now the collateral damage caused by Russia's invasion of Ukraine and the cascade of sanctions against the Russians and Belarusians. The damage of a war economy. 

Bloomberg Economics predicts that in the fourth quarter of this year, British GDP will fall by 1% and the markets are nervous: the FTSE 100, the main indicator of the London Stock Exchange, closed on 31 August down 5.06% from its year high of 7,672.40 points; the pound sterling has depreciated by 15% against the dollar so far this year while the Bank of England is determined to continue raising interest rates to contain inflation. Since December last year and several times in 2022, rates have been raised six times from 0.1 per cent to 1.75 per cent. Truss will have to put out many fires at the same time and it won't be easy.