Published On 18 Oct 2022

Prime Minister Liz Truss has apologised for threatening the United Kingdom’s economic stability after she was forced to scrap her vast tax-cutting plans and embark on a programme of “eye-watering” public spending cuts instead.

After weeks of blaming the markets and “global headwinds” for investors dumping the pound and government bonds, Truss on Monday evening said she was sorry for going “too far and too fast” with her radical economic plan to snap the UK out of years of stagnant growth.

Markets, which plunged after her September 23 “mini-budget”, are still under strain even after Truss’s finance minister Jeremy Hunt tore up her plans on Monday, and she is now fighting to survive, just six weeks after she became prime minister.

It was not clear whether Truss’s apology would quell a growing rebellion in her governing Conservative Party, with a handful of lawmakers urging her to quit. Dozens fear they will lose their jobs at the next election.

Even one of her ministers said she could not afford to make any more mistakes – something that could be difficult when her government looks for deep savings which could deepen an expected recession. Already Hunt has refused to guarantee the budgets of departments such as health and defence.

A new YouGov opinion poll suggested even those Conservative Party members who backed her for prime minister were having second thoughts. It showed more than half of those members polled said she should resign, while a third wanted her predecessor, Boris Johnson, to replace her.

‘Sticking around’

“I do want to accept responsibility and say sorry for the mistakes that have been made,” Truss told the BBC on Monday evening.

“I wanted to act to help people with their energy bills, to deal with the issue of high taxes, but we went too far and too fast.”

She added she was “sticking around” and that she would lead the Conservatives into the next election, due in about two years time, although the statement was accompanied by a laugh.

Truss watched silently in Parliament on Monday as Hunt demolished the economic plan she proposed less than a month ago, and which triggered a bond market rout so deep that the Bank of England had to act to prevent pension funds from collapsing.

For some in the party, the sight of a prime minister humbled in Parliament provided little confidence she could fight on.

The Daily Mail newspaper, which had hailed Truss’s plan, ran a front page with her leaving Parliament on Monday underneath the headline: “In office but not in power”, while the also supportive Sun newspaper called her “The Ghost PM”.

James Heappey, a minister for the armed forces, said Truss, his boss, could not afford to make any more mistakes.

Truss held a meeting of her cabinet team on Tuesday and was due to speak later to her lawmakers, who have been urged by some close to government to hold off from any move to remove her before the government presents its full fiscal plan on October 31.

‘Trickle-down’ economics

Truss was elected by Conservative Party members, not the broader electorate, on a promise to slash taxes and regulation to fire up the economy in a policy dubbed by critics as a return to 1980s Thatcherite-style “trickle-down” economics.

But markets reacted so dramatically that borrowing costs surged, lenders pulled mortgage offers and pension funds fell into a tailspin.

The Bank of England said a report in the Financial Times newspaper about a new delay to the start of its sales of government bonds was inaccurate.

The FT said it had learned that top officials were likely to decide a delay was needed after judging the gilts market to be “very distressed” in recent weeks.

Ryanair boss Michael O’Leary described the UK’s economic situation as a “car crash” which he blamed on the country’s decision to vote to leave the European Union in 2016.

With the UK’s economic reputation shattered, Hunt may now have to go further in finding public spending cuts than the government would have done had Truss not unleashed her economic plan at a time of surging inflation.

Public spending cuts

Torsten Bell, the head of the Resolution Foundation, a think-tank, told BBC radio the government may need to find public spending cuts of about 30 billion pounds ($34bn) – a politically very difficult task after successive Conservative governments cut departmental budgets during the last 10 years.

One area of spending already to go is Truss’s vast two-year energy support package that was expected to cost more than 100 billion pounds ($113bn).

Hunt has said support to households and businesses will now last until April, before it is reviewed, prompting analysts to say families could face energy bills of 5,000 pounds ($5,667) next year.

On Monday, Hunt refused to guarantee previous policies, such as a commitment to increase pensions in line with inflation.