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U.K. Prime Minister Liz Truss Battles to Hang On After Budget U-Turn

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LONDON—Having fired her chancellor of the exchequer days ago, U.K. Prime Minister

Liz Truss

must now battle to save her own job after what many political analysts and members of her own party regard as the worst start to a British premiership in modern times.

Ms. Truss’s popularity rating is the lowest of any British prime minister since the early 1990s, according to polls, after a turbulent few weeks that saw her plan to boost growth through the biggest tax cuts in a generation cause turmoil on U.K. financial markets, forcing the new leader to retreat from her signature economic program—the pillar of her campaign to replace ousted former Prime Minister Boris Johnson just six weeks ago.

Now, Conservative Party lawmakers must weigh a basic calculation: Can the party head to elections, which must be held within two years, with Ms. Truss as the face of the party or is she irreversibly damaged? The outlook for her tenure in Downing Street looks grim, analysts say. Some in the party privately predict she could be pushed out as soon as this week. Downing Street declined to comment.

British Prime Minister Liz Truss reversed key parts of her planned tax cuts on Friday, shortly after ousting Treasury chief Kwasi Kwarteng, in an attempt to salvage her tenure. Photo: Carlos Jasso/Bloomberg News

When asked about Ms Truss’s economic plan, President Biden said, “I wasn’t the only one that thought it was a mistake.” He described the outcome as predictable.

“I doubt if she can last long, I give her at most a few weeks, maybe less,” said

Vernon Bogdanor,

professor of government at King’s College London. Top of mind for many Conservative lawmakers will be whether Ms. Truss is so toxic now that going to the polls would mean an electoral wipeout and cost them their jobs. “They will be motivated by fear of losing their seats,” he said.

On Sunday, several Tories called for Ms. Truss to reset her premiership. “There has to be, in a pretty short time, an apology and a fundamental reset of the government by the prime minister,” said

Robert Halfon,

a Conservative lawmaker. “The government has looked like libertarian jihadists and treated the whole country as kind of laboratory mice to carry out ultra, ultra free market experiment.” Another called on Mr. Truss to quit. “The game is up,”

Crispin Blunt,

a Conservative lawmaker, told the U.K.’s Channel 4.

So far senior cabinet members remain, publicly at least, loyal. “We are going to do things differently, charting a new course for growth,” Ms. Truss wrote on Twitter on Sunday. On Friday, she said she still wanted to press ahead with reforms like deregulation that might help spur the sluggish British economy.

There are still some in the libertarian wing of the party who are vocally loyal.

John Redwood,

a lawmaker and supporter of Ms. Truss’s reforms, said the prime minister should remain. Those who want her out “want to stop all tax cuts, plunge us into recession and claim they warned us. Their economic remedies would be a return to austerity. They are playing political games at the expense of people’s lives and hopes,” he wrote on Twitter on Sunday.

Kwasi Kwarteng was fired as chancellor of the exchequer after a plan to boost growth through tax cuts roiled markets.



Photo:

neil hall/EPA/Shutterstock

The rate of collapse in Ms. Truss’s political authority is unprecedented in modern British politics. What started a month ago as a grand plan for the ruling Conservatives to reshape Britain through ambitious economic reform has now boiled down to utilitarian political calculus as lawmakers weigh whether orchestrating the third defenestration of a Tory prime minister in as many years would hurt or improve their electoral chances.

“The threat of electoral wipe out versus the curiosity of having another leader so soon is a trade off,” says Tony Travers, politics professor at the London School of Economics. Ousting Truss “might be the least weird thing to do.” If she is evicted from office within the coming two months, Ms. Truss would become the shortest serving prime minister in British history, beating the record of George Canning who died in office in 1827 after 119 days.

Ms. Truss’s experiment with Reaganomics—big tax cuts combined with spending increases—turned into a rout. Investors expressed concerns about the scale of borrowing required to fund both tax cuts and an energy subsidy for the British public and businesses at a time of high inflation and fast-rising interest rates. Higher interest rates and inflation increase borrowing costs and put government finances on a precarious footing.

The public, meanwhile, became alarmed at the prospect of much higher mortgage payments as the Bank of England is almost certain to raise interest rates faster than it otherwise would to contain the inflation the plan would fuel.

There followed a series of embarrassing setbacks for the prime minister. Ms. Truss Friday fired

Kwasi Kwarteng,

her longtime political ally and co-author of the economic plan, prompting some in the party and among the public to ask why one should go and the other should stay if they designed the plan together. To replace Mr. Kwarteng, she named Jeremy Hunt, a former health minister who backed her rival

Rishi Sunak

in the leadership contest.

During his first full day on the job on Saturday, Mr. Hunt announced he was effectively abandoning her economic plan—warning voters that some taxes would need to rise and some spending cuts take place to reassure financial markets that Britain’s finances were stable. He will present a new economic budget on Oct 31. Mr. Hunt denied that he is now effectively running the government. “The prime minister is in charge,” he told the BBC on Sunday.

The new chancellor of the exchequer, Jeremy Hunt, has warned that some taxes will need to rise and some spending cuts take place.



Photo:

Stefan Rousseau/PA Wire/Zuma Press

One Conservative lawmaker who won his district in 2019 with a 65% majority says that he lies awake at night worrying about being kicked out when the country next goes to the polls.

“I’ve got private school fees to pay and my mortgage is going through the roof,” he says.

Ms. Truss’s main selling point when she campaigned over the summer to replace Mr. Johnson was that she was a steely operator who could push through radical reform. Now she is politically hamstrung, analysts say. Furthermore, she is a wooden performer and lawmakers are concerned that Ms. Truss doesn’t have the élan to win over the country before the next election in 18 months time. She isn’t a very good communicator, said Mr. Bogdanor.

Few knew of Ms. Truss before she took office and she hasn’t made a good first impression, pollsters say. A poll last week by PeoplePoll found that just 9% of the British electorate had a positive opinion of the former foreign minister.

The Tories are unsentimental about shedding leaders who are considered electoral liabilities.

Margaret Thatcher,

a talismanic leader of the party, was forced out in 1990. More recently they have ditched two of their own prime ministers in the last three years—Theresa May and Mr. Johnson—after poor polling. A Tory lawmaker recently privately compared his colleagues to lions who had discovered a taste for human flesh, and were now insatiable.

The main problem isn’t just agreeing to oust Ms. Truss but how to replace her, one senior Tory official said. Conservative Party bylaws state that the new leader can’t be challenged for a year. Even if party elders convinced Ms. Truss to resign, the bylaw calls for at least two candidates to be put forward to compete for the leadership, meaning another period of uncertainty where Conservative Party members vote for an eventual winner.

Lawmakers also would have to agree on a unity candidate, no mean feat given the party is riven with ideological divides. Possible replacements include Mr. Sunak, Defense Secretary

Ben Wallace

or cabinet minister

Penny Mordaunt.

Some Conservative lawmakers even pine for the return of Mr. Johnson, who is currently making good money giving speeches. When asked if Mr. Johnson fancied a return to Downing Street, a person close to the former prime minister texted, “What do you expect me to say to that!?”

A person close to Mr. Sunak said that, “Liz is the prime minister and Rishi is in Yorkshire keeping his council,” referring to the region in northern England where Mr. Sunak has a house.

Write to Max Colchester at [email protected]

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