THERE WAS once a time when the pound sterling was the pride of Britain, a symbol of the country’s sovereignty. Britons resisted several attempts, under successive prime ministers, to have the pound replaced with the European Union (EU)’s euro.
While the currency has endured many crises over the decades, including the global financial collapse of 2008, this week the unthinkable happened. The pound fell to its lowest level ever against the US dollar. Mortgages were withdrawn. The cost of borrowing shot up at record speed. The Bank of England was forced into a £65-billion intervention to prevent a run on pension funds.
The cause? The words of politicians.
Conservative Chancellor Kwasi Kwarteng had announced, days before, sweeping tax cuts which would see the wealthiest pay less tax and a cap on bankers’ bonuses removed. This would be funded, the Treasury said, by £75 billion in borrowing.
As turmoil unfolded in the financial sector, British Prime Minister Liz Truss remained unrepentant, refused to recall Parliament, and, in a series of radio interviews, tried to defend the policy position of her administration, persisting in the claim that it would result in growth.
“These are very difficult and stormy times,” Ms Truss said in unintentional doublespeak. She linked the crash of the UK currency to everything from Vladimir Putin’s war on Ukraine to a tough “global” situation.
By Friday, reports continued to swirl suggesting Conservative MPs may be forced, yet again in the space of a few months, and mere weeks into Ms Truss’s tenure, to trigger a motion of no confidence to oust their leader.
It is a study in bad governance and its dire consequences.
Ms Truss and Mr Kwarteng had not, apparently, consulted the Office for Budget Responsibility before announcing their sweeping tax cuts. A meeting with this key body was hastily convened on Friday, but both cabinet officials have resisted calls to release the body’s forecasts ahead of time as market jitters continued.
Both officials had campaigned during the Conservative leadership contest this summer on a platform of cutting taxes and shrinking government, caring little about how this played with the overall UK population. (The EU this week agreed to a windfall tax on big energy firms, leaving the country further isolated.)
They have now learnt the real cost of their approach both to economics and dissenting views.
The UK population has not been convinced. The opposition Labour Party shot to a 33 per cent lead over the Conservatives.
Local politicians such as Minister of Sport and Community Development Shamfa Cudjoe should take note of what happens when you refuse to correct course after your errors have been pointed out. No amount of shooting the messenger can erase the effect of deploying unwise, tone-deaf and downright insensitive words.