Last Friday, Liz Truss and her chancellor expected acclaim for their mini-budget. This weekend, she goes into her first Tory conference as leader – battling for survival
y Friday evening, Labour began to sense the size of the political opportunity that was opening up. Shadow chancellor Rachel Reeves and Starmer condemned the entire package as “casino economics”. Within hours of Kwarteng sitting down, the pound had fallen below $1.09 for the first time since 1985 as investors took fright, while the cost of UK government borrowing rose by the most in a single day for at least a decade.
But it was the economy and financial management, traditionally a weakness for Labour, that had suddenly become its strength. Labour had gone into the conference feeling upbeat about an ambitiousand a massive switch to renewables that would deliver cheaper energy for the long term. Its plans to fund energy-price freezes with a windfall tax on oil and gas company profits offered a dividing line with the Tories.
That morning, Kwarteng met financiers including Citi’s UK boss David Livingston, Deutsche Bank’s Tina Lee, Bank of America’s Bernard Mensah and JP Morgan’s Viswas Raghavan, to discuss the government’s budget plans. They arrived expecting to hear how the chancellor planned to restore order after a tense 48 hours. But Kwarteng and his officials instead turned to the guests for answers. What could the government do to calm markets, he asked.
Later that afternoon, as the few supporters of the Kwarteng approach began to attack the Bank of England and the IMF for political bias in their interventions, Tory MPs began to mock the defences, sharing a poster declaring: “The red menace is real! Report all suspected communist activity!” When the PM did re-emerge, it was to give a series of stilted interviews to local radio stations in which she focused on the energy price intervention and blamed the crisis on Putin’s invasion of Ukraine. The anger among MPs swelled as the constituency mail began to roll in and all the talk was of soaring mortgage costs. “It is hard to know what to say to constituents who are emailing me about the budget.
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