Liz Truss blames central bankers for Britain’s economic woes

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Former British prime minister Liz Truss has issued a robust defence of her brief, chaotic time in office, blaming former Bank of England governor Mark Carney for being part of an “economic consensus” that kept growth depressed for 25 years across the Western world.

Ms. Truss took over as Conservative Party Leader and Prime Minister on Sept. 6, 2022, and served just 49 days in office before Tory MPs forced her to resign. Her tenure is best remembered for the introduction of a mini-budget loaded with unfunded tax cuts that caused chaos in financial markets and sent mortgage rates soaring. She withdrew the plan within days and was ousted a few weeks later.

In a speech Monday at the London-based Institute for Government, a public policy think tank, Ms. Truss defended the mini-budget and said that if the measures – which included lower taxes and public spending and cuts to regulation – had been implemented, Britain’s economic growth would be 2 per cent higher by 2030 and private-sector investment would jump 10 per cent.

She said the mini-budget failed – and her tenure as Prime Minister was cut short – because of the reaction from “the political and economic establishment which fed into the markets.”

“I was effectively forced into a policy reversal under the threat of a U.K. meltdown,” she said.

She acknowledged that she moved too quickly and did not effectively communicate her objectives. “The reason we were in a rush was because voters voted for change and I wanted to deliver that change and I knew we had limited time,” she said.

She took aim at Mr. Carney, who criticized her during the Global Progress Action Summit in Montreal last weekend.

“Those with little experience in the private sector – lifelong politicians masquerading as free marketeers – grossly undervalue the importance of mission, of institutions and of discipline to a strong economy,” Mr. Carney told the gathering of centre-left politicians. He added that people who supported Brexit, like Ms. Truss, “tried to create Singapore on the Thames. The Truss government instead delivered Argentina on the Channel – and that was a year ago.”

On Monday, Ms. Truss said Mr. Carney and other central bankers were guilty of keeping interest rates too low for too long, giving people the expectation that “cheap money would go on forever.”

“The central banks have played an important role in pumping the system full of money, keeping interest rates artificially low and essentially enabling this excess public spending to take place,” she said. “I’m afraid there’s quite a lot of finger pointing going on from people like Mark Carney because they don’t want to admit their culpability or the cult of their central bank associates.”

While Ms. Truss did not directly criticize her successor, Prime Minister Rishi Sunak, she said some members of the Conservative Party were part of an anti-growth coalition.

“The anti-growth coalition is now a powerful force comprising the economic and political elite, corporatist parts of the media and even a section of the Conservative parliamentary party,” she said. “The policies I advocate simply are not fashionable on the London dinner party circuit.”

She urged the British government to take bold action by slashing spending, tackling increased pension benefits and delaying net-zero targets for carbon emissions. “In order to grow, we need to change. That starts with acknowledging we have a problem. It means abandoning the stale economic consensus,” she said.

Mr. Sunak’s office did not respond to Ms. Truss’s comments, but some Tory MPs were not impressed with her speech.

“She is a drag anchor to any cause she attaches herself to,” Tory MP Conor Burns said on X, formerly known as Twitter. “And toxic on the doorsteps. Only service she could provide is sustained silence.”

Sarah Olney, the Treasury spokesperson for the opposition Liberal Democrats, chastised Ms. Truss for not apologizing to the public.

“Liz Truss’s refusal to apologize to the families who have seen their finances ruined by her botched budget shows just how out of touch she is,” Ms. Olney said. ”The British public will never forget this shambolic Conservative government for trashing the economy and sending mortgage rates spiralling.”