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“I will take action this day and every day” to deal with the crises facing Britain, Truss said in a rain-lashed Downing Street on Tuesday, channeling the urgent missives to staff written by wartime premier Winston Churchill.
She succeeds Boris Johnson with the country facing brutal economic headwinds that threaten to plunge millions of Britons into poverty this winter. Her team is expected to announce Thursday an economic intervention that could see the government spend as much as £200 billion ($230 billion) over the next 18 months to contain energy prices, according to people familiar with the policy.
The plan as currently drawn up would be a major fiscal gamble — coming close to the £310 billion handed out during the pandemic — that reflects just what’s at stake as the UK grapples with the fallout of Russia’s war in Ukraine.
It would add about 10% to the UK’s £2.3 trillion in national debt. Borrowing that amount would drive the budget deficit to levels that have only been seen in modern times during the global financial crisis and the pandemic.
Market Impact
In addition to potentially rattling markets, such a move carries political risk for Truss, who built her Conservative leadership campaign on promises of tax cuts and a smaller state. That was designed to resonate among Tory members who still obsess about another totemic former leader, Margaret Thatcher.
In reality, though, Truss has little choice but to make a bold move early in her premiership, even if it angers those on the right of the ruling Conservatives who form the bedrock of her support.
Despite inheriting an overwhelming parliamentary majority, the Tories trail far behind the main opposition Labour Party, with polls showing voters in favor of leader Keir Starmer’s calls to freeze energy bills this winter.
As currently drawn up, Truss’s package includes £130 billion to freeze household bills until April 2024 and a discount for businesses that could cost up to £67 billion over 12 months, the documents show.
Key Appointments
Truss appointed her new cabinet ahead of its first meeting on Wednesday, when she will also face Starmer at Prime Minister’s Questions in the House of Commons.
Long-time ally Kwasi Kwarteng became the UK’s first Black Chancellor of the Exchequer, while Jacob Rees-Mogg was made business secretary. They’ve been leading the Truss team’s engagement with industry over her energy plans. Suella Braverman received a major promotion to Home Secretary.
Therese Coffey was appointed health secretary and deputy prime minister, James Cleverly was promoted to foreign secretary, and Ben Wallace was reappointed as defence secretary. Chris Heaton-Harris was made Northern Ireland secretary at a key moment for UK relations with the EU, and former leadership contender Kemi Badenoch will lead the international trade beat. Simon Clarke was put in charge of the “leveling up” agenda.
As well as facing rampant inflation, Truss also has to manage a crumbling National Health Service and labor strikes bringing transport networks to a halt.
Overseas, London is at loggerheads with Brussels and Washington over Brexit, in part due to the path she forged as foreign secretary. Truss spoke by telephone with Ukrainian President Volodymyr Zelenskiy and US President Joe Biden on Tuesday night. Truss accepted an invitation from Zelenskiy to visit Ukraine soon, Downing Street said in an emailed readout of the call.
Job Push
In addition to the energy package, she cited her priorities as growing the economy through tax cuts and reform, and tackling the pandemic-fueled backlog in the health service.
Truss also called for “high paying jobs,” a signal she wants a higher productivity economy where companies can afford to pay people more — something governments from across the political spectrum have tried and failed to do in the past.
The UK also needs to build “roads, homes and broadband faster” — hours after Johnson himself had cited the latter in his own departure speech in Downing Street as one of the signature achievements of his administration.
Overall, though, Truss gave a typically optimistic outlook for Britain’s prospects, in the face of gathering storm clouds.
“We shouldn’t be daunted by the challenges we face,” she insisted, adding: “We can ride out the storm, we can rebuild our economy and we can become the modern, brilliant Britain that I know we can be.”
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