Liz Truss denies crashing economy and attacks media and Bank ‘groupthink’

Liz Truss has dismissed the argument that she crashed the UK’s economy while she was prime minister, and while conceding she made mistakes in No 10, sought to primarily blame “groupthink” from the Bank of England, the media and civil service.

In a speech and Q&A shortly before the anniversary of her government’s so-called mini-budget, which spooked markets with its push for seemingly unfunded tax cuts, Truss twice dodged the question when asked if she wanted to apologise to households facing higher mortgage rates.

Instead, she argued, the primary issues were with economic institutions, such as the Bank of England, which had allowed artificially low interest rates to go on too long, and a wider “sense of groupthink and consensus”.

Speaking after her heavily trailed speech, Truss made it plain she hoped to resurrect her economic arguments within the Conservative party, confirming she would attend the Tory conference next month, where she would be “saying more”.

Asked if the economic record of her 49 days in office had damaged the Conservative brand, Truss pushed back, and accused the questioner of echoing opposition ideas.

“I really want to challenge this phrase, ‘crashed the economy’,” she told the Institute for Government event. “The fact is that since I left office, both mortgage rates and gilt rates have gone higher than they were at the time of the mini-budget. So I just think you are repeating a line to take from Labour.”

The Bank of England had been “pumping the system full of money”, keeping interest rates low, and allowing “excessive government spending”, Truss argued.

“Interest rates were going to go up anyway. I think the real failure was not to tell people, years and years ago, that interest rates were artificially low. That was the problem,” she said.

“We gave people an expectation that cheap money would go on forever. And then when the interest rates went up, there was a problem.”

More widely, Truss argued, politicians had “all of the responsibility, but not necessarily the power” when faced with a media and political landscape she said was inherently opposed to low-tax, small-state government.

Asked why she did not have the Office for Budget Responsibility (OBR) assess the mini-budget before it was delivered, Truss said the OBR had not been asked to check much bigger spending commitments during Covid.

“So I think it’s interesting that media organisations choose to target the mini-budget for not having an OBR forecast, but don’t mention this when it’s about spending,” she said.

“I do think that reveals a mindset, which is: spending is good. They will always be relaxed about that, but cutting taxes is somehow a countercultural thing to do. I think that’s reflected in the media. I think it’s reflected in the polity more broadly.”

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Asked for examples of the civil service trying to block change, Truss said it was more a case of “warnings and back-covering”.

She said: “With anything to do with climate change, officials were enthusiastic and rush to get out papers. If it was something about doing the [migration] deal with Rwanda, there was less enthusiasm.”

While arguing that financial markets were necessarily influenced by politics, Truss conceded that she misjudged their likely response: “If we’d known the fragility of the markets we would have done things differently. These kind of questions are quite difficult because a lot of it, the way I did things was basically the way I am, and my character.”

Asked if she accepted the view of many Tory MPs that her government had been fundamentally incompetent, Truss said: “What I didn’t want to do is point fingers. Of course, it was a very difficult circumstance and lots of people made lots of mistakes. There’s no doubt about that.”