After tax U-turn, Truss pledges to steer Britain through ‘stormy days’

Author of the article:

Reuters

Elizabeth Piper and Alistair Smout and Andrew Macaskill

BIRMINGHAM — Prime Minister Liz Truss pledged on Wednesday to steer Britain through “stormy days” and transform its economy, fighting to restore her authority over a party in revolt after a chaotic first month in office.

Addressing Conservative lawmakers and members at an annual conference overshadowed by internal bickering and policy confusion, Truss sought to reassure investors that her plan would reignite growth and unite a divided country.

An early interruption from protesters asking who had voted for such radical change appeared to fire up the prime minister, and the audience.

“We gather at a vital time for the United Kingdom. These are stormy days,” she said, referring to the COVID-19 pandemic, war in Ukraine and the death of Britain’s longest reigning monarch, Queen Elizabeth.

“In these tough times, we need to step up. I’m determined to get Britain moving, to get us through the tempest and to put us on a stronger footing.”

The conference, once expected to be Truss’s crowning glory after she became prime minister on Sept. 6, has turned into a personal nightmare after she announced a new economic policy that sparked a crisis of confidence among investors.

Her attempt to cut 45 billion pounds ($51 billion) of taxes and hike government borrowing sent markets into a tailspin and left her party facing potential electoral collapse.

Forced to reverse the scrapping of the top rate of tax, Truss was then openly challenged by lawmakers and ministers over other policy areas, in stark contrast to the sense of discipline on display last week at a conference of the opposition Labour Party, which now holds a clear lead in the opinion polls.

CROWNING GLORY?

As she started to speak on Wednesday, two climate protesters from Greenpeace held up a sign asking “Who voted for this?” in reference to the fact that Truss is targeting a radically different direction for Britain after being elected by around 170,000 party members, and not the general public.

“Cutting taxes is the right thing to do, morally and economically,” Truss said, adding that the scale of the challenge ahead was “immense.”

Her U-turn on the top rate of tax has emboldened sections of her party who are now likely to resist spending cuts as the government seeks ways to fund the overall fiscal program.

That risks not only the dilution of her “radical” agenda but also raising the prospect of an early election.

Having entered the conference hall to a standing ovation and the sound of M People’s “Moving On UP,” Truss told the party she wanted to build a “new Britain for the new era.”

“For too long, the political debate has been dominated by how we distribute a limited economic pie. Instead, we need to grow the pie so that everyone gets a bigger slice,” she said in the central English city of Birmingham.

“That is why I am determined to take a new approach and break us out of this high-tax, low-growth cycle.”

Some lawmakers fear Truss will break a commitment to increase benefit payments in line with inflation, something they argue would be inappropriate at a time when millions of families are struggling with the cost of soaring prices.

Ministers say they are yet to take a decision and are obliged to look at economic data later this month.

While markets have largely stabilized after the Bank of England stepped in to shore up the bond market – albeit after the cost of borrowing surged – opinion polls now point to an electoral collapse for the Conservatives.

John Curtice, Britain’s best known pollster, said before the speech that Labour now held an average lead of 25 percentage points and the Conservatives needed to accept they were “in deep, deep electoral trouble.” ($1 = 0.8787 pounds) (Writing by Kate Holton and Elizabeth Piper; Additional reporting by William James and Farouq Suleiman Editing by Mark Heinrich and John Stonestreet)