Liz Truss is battling for her political survival as leading business figures and Conservative MPs pile pressure on the UK prime minister to resign after a series of damaging U-turns that have shredded her credibility.
Truss’s decision to appoint Jeremy Hunt as chancellor and scrap key parts of her economic platform have failed to reassure markets and the City, critics said. But her allies lashed out at those trying to remove her, warning that “plotters” were forcing the Tories towards a general election.
Downing Street was braced for further market turbulence on Monday, after Friday’s sell-off when investors warned that Truss’s attempt to reassure them by scrapping an £18bn corporate tax cut was not enough.
Sterling gained as much as 0.9 per cent to $1.1273 in Asia-Pacific morning trading on Monday, partially reversing a 1.4 per cent fall suffered on Friday.
Leading City figures and three Tory MPs have openly called on Truss to quit.
Stuart Rose, a Tory peer, former M&S boss and chair of Asda, said the PM had lost the confidence of business and investors. “She is a busted flush,” he told the Financial Times. “As prime minister, you have to have the confidence of business, investors, the electorate and colleagues in the party. She has none of these.”
Dame Alison Carnwath, former chair of Land Securities and senior adviser at investment bank Evercore, said Truss had “no mandate, insufficient support in parliament, incomprehensible economic policies and lacks style, charisma and authority”. She added that Truss “should enter the record books as the shortest serving prime minister ever”.
Guy Hands, founder of private equity firm Terra Firma, said that Truss “should go as soon as possible”.
He said: “A grown-up needs to take over the Conservative leadership and be a prime minister who represents everyone in Britain . . . that person needs to do this soon, before the lights go out irreversibly on this once great nation.”
Hands added that the “sacking of Kwasi Kwarteng ranks as one of the most cowardly political acts committed by any prime minister at any time since Britain had a form of democracy”.
Crispin Blunt, a former prisons minister, said “the game is up” and Tory MPs had to decide “how the succession is managed”. Andrew Bridgen and Jamie Wallis, both backbench Conservatives, also called on Truss to resign.
Investors warned that it would take time for the UK to rebuild market confidence after the unprecedented burst of volatility sparked by Truss’s fiscal plans.
“Many investors will need some time, as well as fiscal good news, to ascertain if gilt prices have yet found a base and therefore [if they] really want to re-engage,” said James Athey, a bond fund manager at Abrdn.
Several cabinet ministers have begun to ring around MPs in a bid to drum up support for potential leadership contenders, including supporters of defence secretary Ben Wallace, leader of the Commons Penny Mordaunt and former chancellor Rishi Sunak.
But allies of the prime minister likened the “plotters” to campaigners for a second Brexit referendum, who rightwing news outlets dubbed “enemies of the people”.
One pro-Truss Conservative party figure said: “Those plotting against the government clearly do not have any regard for our economic prosperity or the fate of the markets. Markets respond to political instability.”
The official added there would not be a “coronation” of a new leader. “Those wanting . . . [a] rerun of the summer [leadership] contest will simply bring about an early general election. The whole Conservative party owes it to the British people to focus entirely on them. It is time the plotters thought about who they work for: it is the British people.”
On Sunday Hunt was locked in talks with Truss about a new economic plan to be presented on October 31, which is likely to involve further U-turns on tax cuts as well as spending cuts, leading some MPs to suggest that the chancellor had become the effective prime minister.
Hunt warned on Sunday he was “not taking anything off the table”.
Charlie Mullins, the founder of Pimlico Plumbers, said the party now “can’t get rid of her” for fear of losing further credibility. But he said that while he had been considering donating to Conservative party again, he would now “wait for the next leader”. He said Hunt should “steady the ship” but he was “disappointed” by the U-turn on corporation tax.
Rose said he believed that the rate of corporation tax was less of an issue than an “overall and clear plan” to allow companies to invest. “Every CEO in the country is working on their 2023 financial year plans. All of us are facing enormous headwinds. Companies just want a clear runway.”
In a rare intervention on domestic UK political matters US president Joe Biden said Truss had made a “mistake” with last month’s mini-Budget. “I disagreed with the policy, but that’s up to Great Britain to make that judgment,” he said.
Goldman Sachs cut its forecast for the UK’s economic growth and warned that it now expected a more significant recession following the U-turn on corporation tax.
Additional reporting by Katie Martin in London