2022 – Britain Gets Three Prime Ministers and Half a Mortgage Panic

Boris Falls, Liz Truss Crashes the Economy in 44 Days, Rishi Sunak Arrives to Clear Up

Britain Gets Three Prime Ministers and Half a Mortgage Panic

Boris Falls, Liz Truss Crashes the Economy in 44 Days, Rishi Sunak Arrives to Clear Up

The year 2022 provided British political life with a sequence of events so compressed, so unlikely in their specific combination, and so productive of the specific comedy that political catastrophe generates when it arrives too quickly for the participants to maintain their dignity, that historians will require the full scope of their analytical tools to explain it and satirists will require very little, because the events themselves have already done the satirist’s work.

Boris Johnson resigned in July, after the ministerial resignations and the Chris Pincher revelations and the Partygate Fixed Penalty Notice and the standards investigation had collectively exhausted the parliamentary party’s capacity to maintain confidence in a leader whose relationship with accuracy had been a standing concern since before he entered politics. Liz Truss won the subsequent Conservative leadership election, defeating Rishi Sunak among the party membership in a contest conducted on the strength of policy promises whose relationship with economic reality the membership had not been invited to assess in detail. Truss lasted forty-four days as Prime Minister — forty-five, if one counts with the generosity appropriate to a tenure so brief that counting individual days feels less like political history than personal sympathy.

Rishi Sunak succeeded her, becoming Prime Minister on 25 October 2022 — the first British Prime Minister of South Asian heritage, the first Hindu Prime Minister, and, at forty-two, the youngest person to hold the office. He arrived to manage the consequences of decisions made in the preceding six weeks that had moved the mortgage market, the bond market, the pound, and the IMF’s assessment of British economic management in directions that none of them had previously experienced at the speed they had just experienced them.

The Truss Mini-Budget: An Experiment in Applied Economics

The Growth Plan of 23 September 2022 — the fiscal event that the press immediately called the mini-budget — was Liz Truss and Kwasi Kwarteng’s attempt to demonstrate that supply-side economics, applied with sufficient conviction and sufficient scale, could produce growth that would outpace the debt incurred in producing it. It was delivered without an accompanying independent Office for Budget Responsibility forecast, which was a departure from the fiscal framework that the post-2010 settlement had established as the mechanism for maintaining market confidence in fiscal decisions.

The market’s response was immediate and comprehensive. The pound fell to its lowest level against the dollar since 1985. UK government bond yields rose sharply as markets sold gilts — the bonds through which the British government borrows — in volumes and at speeds that raised the yield on thirty-year gilts by the largest amount since the gilt market had been functioning. The pension funds, which held gilts as liability-matching assets and which had exposure to liability-driven investment strategies that required gilt prices to remain within certain bands, faced margin calls that they could not meet from their existing holdings, requiring the Bank of England to intervene as buyer of last resort to prevent a collapse of a significant part of the UK pension fund sector.

The Bank of England’s intervention — an emergency gilt-buying programme announced on 28 September, five days after the budget — was the mechanism that prevented the specific financial crisis. It was also the clearest possible market verdict on the fiscal event that had made it necessary: that the Growth Plan had not been received as a credible framework for sustainable growth, and that the credibility deficit required central bank intervention to prevent its immediate financial consequences from becoming systemic.

The Lettuce: Democracy in Vegetable Form

The Daily Star newspaper placed a lettuce in front of a photograph of Liz Truss and ran a live stream asking readers to vote on whether the lettuce would outlast the Prime Minister. The lettuce won. It won with several days to spare, in the sense that the lettuce, photographed fresh on the day of the budget, retained its structural integrity for longer than the political project it was measuring. The lettuce was, in its way, the most precise piece of political commentary of the year — not analysis, not argument, not policy prescription, just the quiet observation that the iceberg variety maintains its cohesion rather longer than the available evidence suggested the Truss premiership would.

The forty-four days contained a remarkable quantity of political event compressed into a duration that most governments do not manage in a month. The Growth Plan. The Bank of England intervention. The reversal of the corporation tax cut. The reversal of the income tax rate cut. The resignation of Kwasi Kwarteng. The appointment of Jeremy Hunt as Chancellor. The reversal of almost all of the Growth Plan’s measures. The no-confidence vote management. And finally, on 20 October, the resignation speech, delivered with the composure of someone who had processed the situation and arrived at the available conclusion, which was the correct conclusion, even if the forty-four days that preceded it had not been.

Rishi Sunak: The Arrival and the Context

Sunak’s arrival at Downing Street was received with the relief that follows a period of chaos when a figure associated with conventional competence becomes available — the specific relief of people who have been alarmed and are now being offered the prospect of not being alarmed, which is a lower bar than normal expectations of government but which the circumstances of October 2022 had made the relevant bar.

His first statement outside Downing Street acknowledged errors and promised stability — the word stability carrying, in October 2022, a weight that no single word in political communications had borne since the financial crisis of 2008, because stability was the specific quality that the preceding weeks had demonstrated was not available and that the markets, the mortgage holders, the pension funds, and the international observers had been requiring. Promising stability was, under the circumstances, the correct thing to promise. Delivering it was the work of the parliament that remained.

The specific inheritance — the Truss budget’s market damage, the energy crisis that the invasion of Ukraine had made severe, the NHS pressures that the pandemic had accumulated and the post-pandemic period had not resolved, the cost of living crisis that the combination of energy prices, supply chain disruption, and the post-Covid demand surge had produced — was not the inheritance that anyone would have chosen and was the inheritance that the circumstances had determined. Sunak managed it with the specific combination of fiscal hawkishness and political caution that his background in finance and his experience of the Truss budget’s lessons suggested, which was either the right response to the circumstances or the too-cautious response to circumstances that required bolder action, depending on whether one weighted the market stability argument or the public services investment argument more heavily.

The Conservative Party’s Unresolved Crisis

The three Prime Ministers of 2022 were the symptom rather than the cause of a Conservative Party in a condition that three Prime Ministers in a year — or five in six years, if one counts from Cameron — could not resolve through leadership change alone. The party’s European crisis, managed through Brexit, had not been resolved by Brexit — it had been replaced by the arguments about what Brexit meant and whether it had been delivered properly and whether the Northern Ireland arrangements were compatible with unionist principles. The economic debate between supply-side optimism and fiscal conservatism had not been resolved — it had been tested by the Truss experiment and had produced a dramatic answer, but the underlying ideological tension remained in the party’s various factions. The cultural arguments about social conservatism and liberal Conservatism had not been resolved. The question of the party’s relationship with the Red Wall seats — won in 2019, requiring economic policies that the party’s southern base did not prioritise — had not been resolved.

Sunak was managing a party whose unresolved tensions had produced, in 2022, their most dramatic expression. The management was competent. The tensions were not resolved by competent management alone, and the general election of 2024 was the moment at which the electorate delivered its assessment of whether the management had been sufficient.

Auf Wiedersehen, amigo!

Boris Johnson resigned as Prime Minister on 7 July 2022 following the resignation of 59 ministers and parliamentary private secretaries in a single day. Liz Truss won the Conservative leadership election and became Prime Minister on 6 September 2022. Her Growth Plan of 23 September 2022 caused a severe market reaction, with the pound falling to its lowest level against the dollar since 1985 and gilt yields rising sharply. The Bank of England announced an emergency gilt-buying programme on 28 September 2022. Kwasi Kwarteng was replaced as Chancellor by Jeremy Hunt on 14 October. Liz Truss resigned on 20 October 2022 after 44 days in office. Rishi Sunak became Prime Minister on 25 October 2022, the first person of South Asian heritage and the first Hindu to hold the office. The Daily Star’s lettuce live stream became a viral moment in British political culture.

ORIGINALY PUBLISHED: 7 July 2022 (London, UK)

Alan Nafzger

Alan Nafzger was born in Lubbock, Texas, the son Swiss immigrants. He grew up on a dairy in Windthorst, north central Texas. He earned degrees from Midwestern State University (B.A. 1985) and Texas State University (M.A. 1987). University College Dublin (Ph.D. 1991). Dr. Nafzger has entertained and educated young people in Texas colleges for 37 years. Nafzger is best known for his dark novels and experimental screenwriting. His best know scripts to date are Lenin’s Body, produced in Russia by A-Media and Sea and Sky produced in The Philippines in the Tagalog language. In 1986, Nafzger wrote the iconic feminist western novel, Gina of Quitaque. He currently lives in Holloway, North London. Contact: [email protected]