Truss has been facing increasing pressure from within her party to reconsider her economic plans, which included around £43 billion worth of unfunded tax cuts. Her mini budget, delivered by Kwarteng himself, started a chain of events that triggered mortgage market chaos the following week. The pound hit an all-time low, and a number of lenders pulled their mortgage products from the market. The Bank of England then decided to buy government bonds to “restore orderly market conditions” and prevent a “material risk to UK financial stability.”
“Amid the wait for the wheels to screech on another U-turn, the door to no. 11 Downing Street is already groaning on its hinges, with Kwasi Kwarteng exiting the Treasury,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, commented. “The finger of government blame was pointing straight at the Chancellor as soon as he was ordered to dash back to from the US a day early, going straight from arrivals to a humiliating departure.
“His promise of a medium-term fiscal plan to be delivered on Halloween did not provide enough reassurance that the government was in control of economic policy and investors showed signs of taking fright again. But Liz Truss is still facing a rocky horror show of her own making, given that the UK is still hurtling back into a 1970s time warp.
“Even if this embarrassing reshuffle is accompanied with a fresh reversal of policy, as far as the credibility of the government is concerned, significant damage has been done. There will be a long way to go and significant bridge building ahead before the UK risk premium disappears.”
Meanwhile, over at our sister website Mortgage Introducer, property industry experts are saying that the Truss tenure as prime minister is now clearly in trouble.
“This is officially now a government without a mandate, without a plan and without a clue,” Andrew Montlake, managing director of mortgage broker Coreco, remarked. “The Conservatives know that Truss will never be able to turn people around after this and that whenever an election is called, they will be annihilated.
“Their only chance is to install a Sunak and Mordaunt double-act to restore some sense of calm maturity to proceedings to see the country through hard times. This may not be enough, though, as the sense of outrage among the British people will linger for a long time.”
For Lewis Shaw, founder of Mansfield-based Shaw Financial Services, Truss is “a pound shop Thatcher with no mandate from the country.”
“We need a general election now,” he said. “We’re scraping the barrel so hard we’re through the bottom. Just think of the poor joiners whose job it is to get the spur marks out of the wood-panelling in Downing Street.
“The current administration has no ideas or leadership and has torpedoed our economy. If that’s not a good enough reason to turf them out, I don’t know what is.”
Joe Garner, managing director at London-based property developer NewPlace, said the Truss administration has been in “absolute shambles.”
“Truss has no mandate, no control and absolutely no idea how to govern,” he added. “A general election should be called immediately because even the most blinkered Tory voter can see this is doomed to fail.
“In the meantime, it might be an idea to pull Hammond or Osborne out of retirement as a caretaker to at least add some credibility and stability. Truss isn’t fit to govern, has no mandate to govern and unless this government calls a general election, its credibility and that of the UK will continue to be shot to bits.”
UPDATE
According to a BBC report, Jeremy Hunt is set to be installed as the new chancellor imminently.
