The Tory party has a new leader, but few if any of her peacetime predecessors took office in such dire circumstances. A few decades ago, an Irish MP was giving the Dail a plangent account of his country’s woes. “Ireland’s cup of troubles is overflowing,’ he declaimed -’ and it is not yet full.”
For Ireland, many people on this side of St George’s Channel would now read Britain. There are many pessimists. Yet they do not include Liz Truss or her Chancellor, Kwasi Kwarteng. They are economic radicals. For years, a lot of thoughtful Tories have been arguing that the solution to the country’s problems is economic growth, and shaken their heads as to the difficulty of stimulating it. The new PM shares the diagnosis but is not interested in the gloom over difficulties. What the country needs, the country will have. She will provide it.
That might sound like the popular view of Margaret Thatcher: headstrong, with hand-bag swinging in pursuit of her goals. Not so. The Lady was much more cautious than she appears in the mythological version. She would have been horrified by the scale of quantitative easing. ‘Printing money:’ there was no greater insult in the Thatcherite lexicon. Equally, she would never have been happy about unfunded tax cuts.
Truss-onomics is Reaganomics
It has been suggested that Ms Truss is Margaret Thatcher the Second, and to put it mildly, the new Lady has done nothing to distance herself from that description. As it was helpful with the Tories’ membership, one can see why.
But Liz Truss is entitled to claim kinship with another great Conservative statesman: Ronald Reagan. Truss-onomics is Reaganomics. The old boy once declared that the deficit is big enough to take care of itself. The incoming PM would be unwise to say that; the markets are jittery enough as it is. Yet it may be what she secretly believes.
Through tax cuts and other measures, there is going to be significant relief for families and businesses. The deficit will inevitably grow, by at least five per cent. Of itself, that may not sound too alarming, yet any complacent reverse-Micawberite must remember one factor: inflation, stimulated by all the new money.
Policy tightrope
Reagan had Paul Volcker at the Federal Reserve to ensure that fiscal laxity was tempered by a tight monetary policy. Some of Ms Truss’s new team have let it be known that they are not impressed by the Bank of England’s recent counter-inflationary measures. Be careful what you wish for. If the bank is being encouraged to firm up monetary policy, can it do so without the higher interest rates weakening the effect of the fiscal stimulus? Although Volcker managed it, it is a policy tightrope.
Truss and Kwarteng are both cheerful souls. They are emphatically not the sort of Tories who are never happier than when lecturing hungry sheep about the price of grass. Nor do they believe that their party should always sound like the political wing of the Treasury. Bold and radical, they are taking a bold and radical risk. They have had a strikingly successful campaign at a young age. They would not be human if they did not feel triumphant. Now they must deliver. Can they?
Given that the economists are divided, we must fall back on instinctive loyalties. Anyone who cares for his country must surely hope that the Government succeeds. In these perilous times, we cannot afford the luxury of failure. We therefore need decent leadership and a strong Government.
If team Truss can provide that, there is all to play for in electoral politics. Were Tony Blair the Labour Leader, he would already have won the next election. Sir Stumbler is not Tony Blair. He does possess a certain wooden decency, which would have been useful against Boris. But beyond that? Are readers aware of Keir Starmer’s plans to deal with the current crisis? Do I hear a ‘no’? If so, there is no need to feel guilty. Neither is he.
Animal spirits
Liz Truss has a plan. She must now expound it and take the British public into her confidence. In this, she will have one advantage. She is not a flashy performer. She will not sound like Boris Johnson in clown mode. Good. The public will want to be reassured that she knows what she is doing. All her plans for growth rely on the animal spirits of the British people. For that to assert itself, she must offer inspiring seriousness. Ted Heath talked about ‘Action, not words.’ But in politics, words are action. She will
have to craft the right language to win trust and maintain momentum.
If she could do that, and although the country and the world are in a terrible state o’ chassis - all is not lost.
