Political crisis in 2022? The country is in the grip of market turbulence and a possible financial crisis, so if you are just catching up now below is our summary of how we got into this mess.
Tuesday 6th September – Liz Truss becomes Prime Minister of the United Kingdom
Liz Truss beats Rishi Sunak in the race to become Prime Minister. A large reason for her victory is down to the fact that she promised to cut taxes and help the country through the winter with soaring energy prices.
Thursday 8th September – gas price “freeze”
On her third day in office, Liz Truss announced a sweeping plan to freeze gas and electricity prices for two years. Costing tens of billions of pounds to the British Treasury, this plan has the potential to be the largest single government intervention in economic history. It will mean that the average UK household will pay £2500 per year on energy bills.
Friday 23rd September – “mini-budget”
New Chancellor, Kwasi Kwarteng announces the “mini-budget” which sends the value of the pound spiralling. Policies include:
- Basic rate of income tax cut from 20% to 19% from April 2023.
- Removal of the 45% higher rate of income tax.
- Reversal of the 1.25% rise in National Insurance.
- No limit on bankers’ bonuses.
Monday 26th September – UK Government bond selloff begins, perhaps the start of a financial crisis
The Bank of England announces that it will not hesitate to raise interest rates in response to the mini budget and soaring inflation rates. Government bonds are then sold to try and calm down the market yet the pounds falls to just $1.05 – a record low. It’s been less than three week since Truss became Prime Minister and £300 billion has been wiped from the combined value of the UK’s stock and bond markets.
Wednesday 28th September – IMF statement
The International Monetary Fund (IMF) releases a statement criticising the mini-budget, saying that the proposals made my Kwarteng and Truss were only going to raise levels of inequality in the United Kingdom. They urged the government to reconsider their plans.
Thursday 29th October – Labour take a huge lead in the polls
With the country in financial turmoil, Labour opened up a 33% lead in the polls. It is the biggest polling gap between the two parties since records began and led to many people in the country calling for a general election.
Monday 3rd October – 45p Tax Rate U-turn
Under mounting pressure, Kwarteng announces that the planned abolition of the 45% tax rate for the country’s highest earner was to be scrapped. In an interview with the BBC, the Chancellor said that the proposal was drowning out the positive aspects of the budget, including the energy support and the cuts to the basic rate of income tax.
Wednesday 5th October – Liz Truss’ conference speech
Addressing the Conservative Party conference in Birmingham, Truss said she would make headway with her plan for economic growth, pledging that she would ensure the UK sails through the current turbulent times.
The PM also spoke against the ‘anti-growth coalition’ and vowed to take a new approach to bring the UK out of the high tax and low growth state.
Wednesday 12th October – Liz Truss’ first PMQs and Bank of England stops their intervention
During her first Prime Minister’s Questions (PMQs) since the chancellor’s contentious mini-budget, Liz Truss says she will ‘absolutely’ not cut public spending. The Bank of England also indicated that they would be ending their intervention. “We have announced that we will be out by the end of this week,” said Andrew Bailey, “three days left now and you’ve got to sort it out”.
Friday 14th October – Kwasi Kwarteng sacked by Liz Truss
Despite public backing from Liz Truss just days earlier, Kwasi Kwarteng is removed from his position of Chancellor by the Prime Minister. His sacking made Kwarteng Britain’s shortest-serving chancellor since 1970.
Saturday 15th October – Jeremy Hunt announced as the new Chancellor of the Exchequer
Jeremy Hunt, who has previously tried to become Prime Minister twice, is announced as Kwarteng’s replacement. Incredibly, he is the fourth Chancellor in as many months. Hunt admits that Liz Truss had made mistakes and that he would have to make some difficult decisions in the week ahead.
Monday 17th October – Hunt tears up the mini-budget
With UK markets in turmoil, the new Chancellor announces that almost all of the proposals from Kwarteng’s mini-budget are to be scrapped. This meant that:
- Basic income tax rate would stay at 20% indefinitely.
- Energy support would only last for six months, at which point any future support would be more targetted.
- Corporation would stay at 25%.
Interestingly, though, Hunt decided to keep bankers’ bonuses uncapped.
Tuesday 18th October – Tory members call for Truss to resign
In a poll for Conservative party members, it was found that the majority felt that Truss should resign. Incredibly, the majority of them also felt that Boris Johnson was the best person to take the reigns should she step aside.
Wednesday 19th October – Truss guarantees the pension triple lock
Liz Truss, after seemingly hiding from the House of Commons a few days earlier, announces to parliament promises to keep the pensions triple lock. This means that pensions will continue to rise with inflation. During the same PMQs, Kier Starmer tells Truss that she no longer has control of her party or the government.
Wednesday 19th October – Home Secretary, Suella Braverman, is sacked
In another blow to her leadership, Liz Truss is forced to sack the home secretary after she sent government documents to an MP from her personal email.
Wednesday 19th October – Tory MPs bullied into voting with the government
To cap off a day of chaos, several Tory MPs were bullied into voting with the government in a vote related to fracking. Tory whips warned MPs that ‘proportionate disciplinary action’ would take place against anyone who failed to back the government in the vote.
Thursday 20th October – Conservative MPs call for Truss to resign and Starmer demands an election
The total number of Conservative MPs that have called for Truss to resign as Prime Minister reaches 14 while Kier Starmer announces on Twitter, and in a press conference, that he wants a general election, now.
Political Crisis – Final thought
Each day is bringing more turmoil to the government and the economic stability in the United Kingdom. It’s impossible to see how Liz Truss can continue as Prime Minister for much longer as her party collapse around her. The question is, where do we go from here?