On the final day of a Tory Party conference in Birmingham, new U.K. Prime Minister Liz Truss railed against an “anti-growth coalition,” which included the Labour Party, environmental advocates, trade unions and other groups. Truss’ speech was interrupted by protests against her government’s decision to remove a ban on fracking for shale gas. It was hardly an inspiring moment for the new prime minister, who is taking office during a difficult time for Britain. New reports have suggested that the British economy may not fully recover from its current malaise until 2024 at the earliest, as inflation and work slowdowns have led to families and businesses dealing with increasing costs. While Truss has promised to break the “high-tax, low-growth cycle” by embracing free market principles, it is clear that Britain’s current economic conditions are not suitable for an approach governed by less government intervention. If Truss does choose to embrace economic policies influenced by supply-side fiscal economics and the unfettered spirit of the free market, average people in Great Britain will end up being those who bear the brunt of the cost.
Truss’ policies have already done more harm than good for the British economy. When Truss and Chancellor of the Exchequer, Kwasi Kwarteng, unveiled a budget pledging tax cuts on top earners of up to $45 billion pounds (approximately $48 billion), the news sparked Britain’s largest currency and bond crisis since the early 1990s. Truss has made no secret of her desire to slash taxes, limit the power of trade unions and roll back environmental regulations, but it takes a serious stretch of the imagination to actually believe such policies will ultimately benefit the British economy. There are alternative methods of increasing productivity, such as implementing green industry policies or property taxes. Furthermore, countries such as Germany and the Nordic states, which have implemented higher rates of taxation, maintain robust and successful economies. Massive tax cuts on the rich are also a recipe for increasing economic inequality. Although Truss did announce a £60 billion pound plan to guarantee energy prices for families and another similar-sized program to limit energy costs for businesses, it is unclear how her government intends to finance these programs without sending the deficit into an unmanageable spiral.
The strongest negative effects of Truss’ plans will be felt by those who are already the worst off in British society. Many analysts have warned of a cost of living crisis in Great Britain this coming winter, which may force large numbers of people to choose between heating their homes and having food in their refrigerators. A cost of living crisis has already led to a massive series of protests, which some organizers stated were the largest British protests in years. Many protestors burned their utility bills in anger over soaring prices in advance of winter.
Inflation and poor economic management have also increased the prices of other necessary goods, such as foodstuffs, with one protestor stating that “working people cannot afford to live.” So-called “warm rooms” are beginning to open up throughout Britain in order to provide shelter for those who otherwise could not afford it. Other increased costs will also place heavy burdens on hundreds of thousands of households. A recent study found that the inflation rate for Britain’s low-income families is an astonishingly high 19 percent. Despite this, Truss’ government plans to increase benefits in line with wages without considering inflation, meaning that even a relatively large increase in benefits according to wage data may not be enough to prevent economic harm. A new analysis found that this decision could push as many as 200,000 children into poverty due to the massively high costs of living during the winter.
While it is unlikely that Truss will change track in any major sense, the Labour Party can implement serious improvements if they win the next general election. Unsurprisingly, Truss is suffering poor approval ratings, with a recent poll reporting she is more unpopular than Boris Johnson at the height of the Partygate debacle. Provided the Labour Party wins the next general election, their economic plans may offer some hope to the beleaguered British population. The party has plans for increased investment in multiple key areas such as public services, health, infrastructure and child care. Crucially, the Labour Party also plans to supplement this with more investments in private businesses in an effort to increase the size of a flagging workforce. Increased investments in the health sector are also vital, as British health services suffered massively in the wake of Brexit and the ongoing pandemic. Unlike the Tories, the Labour Party recognizes that the British economy can be revitalized through alternative mechanisms to simply implementing cuts at every level of spending. But as long as Liz Truss and the Tories remain in power, the British government will continue to pursue economic policies that let its population down.
Theodore Brita is a junior majoring in political science.