Review – Buckle up! The Liz Truss era is here – James Forsyth via the Spectator

This is an outstanding article by James Forsyth, political editor at the Spectator. Considering that he’s a close friend of Rishi Sunak and that he actively supported Sunak against Liz Truss, the new UK prime minister, it’s very powerful. I have closely followed James’ insights over nearly a decade and for me they have always been remarkably perceptive.

Despite his bias in favour of Sunak, this latest article is remarkably dispassionate. Open the link to read it:

I too must at this stage declare my bias. Between Sunak and Liz Truss, I have been a passionate Sunak supporter. So I too will supress my natural suspicion of Liz Truss and look for redeeming features.

James Forsyth’s articles simply touches all the bases in terms of challenges facing the Liz Truss – he leaves the reader to reflect on the risk of success. I will return to the subject of risk presently.

For me, there are a number of related threads:

Firstly, the concept of a country borrowing its way out of difficult is not new. It’s well covered in Keynesian Economics. Post war, it was very popular, especially with socialist governments. Ineffective application of the doctrine led directly to the hyper inflation of the Seventies. This was finally reversed when Regan and Margaret Thatcher led the way to alternative economic policies. The concept works well when Governments invested in robust capital projects which have a strong economic return financed by low cost government borrowings. Most governments simply lost control, with politically chosen projects chosen despite protests of seasoned financial observers. Another more recent example is China, following the Subprime Crisis. Anyway, returning to the Truss era, there are clearly no projects that have been defined in any substance other than motherhood aspirations of less red tape etc. This is deeply worrying.

Secondly, the Truss team are largely lightweights, with no serious record of achievement, either individually let alone collectively. These are political flunkies. What’s most obvious is the remaining heavy-hitters are on the back benches, out of government, or they have retired.

Thirdly, there is serious concern that Truss will win over her MPs in parliament, yet alone the wider electorate with an election looming in couple of years.

Fourthly, there is little consideration of delivery, with possibly the most radical change since the National Health Service was introduced after WWII – indeed from the beginning that failed to match blueprint of its designers. Look to the record of major Government defense or technology projects, with huge overspends, parliamentary enquiries and cries of cronyism.

Fifthly, with the absence of robust costing, there’s certainly seems little thought of risk assessment other than ‘speculative in the round’.

Finally, it’s worth dwelling on the wider economic and geopolitical context. Interest rates are rising rapidly to deal with inflation, triggered by massive financial expansion to redress the economic carnage caused by Covid. Unfortunately, it is necessary to add political risk because of global tensions related to Ukraine and Taiwan. Political risk also penalizes ‘lightweights’ diverging from economic orthodoxy as espoused by the likes of the International Monetary Fund or the leading independent central banks of the world. Collectively, risk specialists would focus on the transformation risk.

If you are unconvinced, simply wait and watch how financial markets behave. Watch for speculators taking a punt on Sterling, and the UK’s major quoted businesses.

Please correct me if you disagree.

One response

  1. Dr Alf is correct .
    The amount of borrowing required to fix the immediate effects of the cost of living crisis,fixing the NHS,Social Care and the deadweight costs of government,the police,local authorities and the impending homelessness crisis is beyond Mrs Truss’s administration.
    I think it is beyond any UK government because of the failure to address root causes.
    Firstly we export too little and are not earning foreign exchange.
    This is evidenced by the fact that we have been £3 billion GBP in deficit on our balance of trade every month of every year since 1981.
    Secondly the civil service is out of control and now numbers 370,000 people which is 280,000 too many….Jacob Rees Mogg has been far too timid as was Truss when she worked under Boris Johnson.
    The obvious way to deal with this is to put exports on a war footing and legislate to ensure that are directoral class only give themselves bonuses if they make a profit,sell and export.
    The NHS is overwhelmed because people abuse the ambulance service,because GP’s despite their pay (£142,000 gbp year,representing a massive increase) are still not doing their jobs.
    We have a problem within the NHS of out of date working practices ,the public health unions and too many managers.
    The biggest problem however is the attitude of too many of the British public who smoke drink,eat thr wrong things, fail to exercise and get too little sleep.
    They must be educated to change their ways to relieve pressure on the NHS.
    Whether the cigar smoking overweight ,karaoke loving Dr Coffee can set the right example is questionable.
    The police are a joke and need to be flattened into a responsive structure that catches criminals and “woke ” Chief Constables need to be cleared out so that there is a National police force not 100 different operations.
    We have 22 local authorities which are either bankrupt or in special measures,in receipt of Section 114 notices.
    We are sending help to Ukraine,have lost control of our borders and are 16.5 million houses short with a build rate of 150,000 and legal population growth of 350,000.
    Worker productivity is now 42% lower than German levels,laziness and entitlement is rife and UK managing directors seem incapable in 80% of cases of motivating staff or doing much more than breathe,look important and wear a suit.
    There should be no strikes in essential public services including the NHS,teaching,train drivers,tube drivers.
    This requires immediate legislation,an imposed settlement and the toughness to face down a General Strike in the autumn.
    Whether Liz Truss and her “lightweights” can deal with these problems and shake the public out of their torpor is questionable.
    Like Dr Alf in his Mediterranean lair I look at all this from leafy Hertfordshire wondering where it will all end.

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