Suddenly, Keir Starmer has become Britain’s prime minister in waiting. The catastrophic opening weeks of Liz Truss’s premiership has utterly transformed the political weather. Labour’s slow recovery after the disastrous Corbyn years has been turbocharged by the new Tory leader and her chancellor, Kwasi Kwarteng. Labour now enjoys a poll lead of up to 33 percent, and is seen by many as the inevitable victor in the next general election, which must be held by January 2025.
Truss and Kwarteng destroyed the Conservatives’ reputation as careful custodians of the British economy with their budget on 23 September. The markets hated the way the former party of sound money planned to borrow billions to fund tax cuts, on top of existing promises to reduce the increase in energy bills and the debt built up during the pandemic. The pound approached parity with the US dollar, and pension funds faced insolvency. Mortgage lenders withdrew home loans from the market as interest rates looked set to soar to protect the value of the pound. Millions of people are worried about the consequences, and blame the already unpopular Tories.
Labour has often been portrayed as the party that presides over financial crises when in government. The party devalued the pound in 1949 and 1967, and famously had to ask the International Monetary Fund for an emergency loan in 1976. (Ironically, it turned out that Britain’s finances weren’t as bad as the Treasury warned, and the loan wasn’t needed after all.) Now, it’s a Tory government that is damned by association with the IMF, as the international lender of last resort condemned the party’s budget.Continue reading