Great Britain in peril: Liz Truss faces various pitfalls

Liz Truss, Britain’s new prime minister, faces a mountain of challenges that could be a Herculean task for any leader to overcome. The population groans under rising energy prices, and inflation is double-digit. And according to forecasts, the country is in danger of slipping into a recession. Added to this are foreign policy challenges, such as post-Brexit complications, the war in Ukraine, and dealing with China. It could be too much to handle.

After the tumultuous years of Boris Johnson, one would have hoped for Britain to catch a break, to find optimism again after years of uncertainty. But the reality is different as Britain faces a dire situation on various fronts. Although Truss mentioned her intention to make the country a “nation with big goals,” it is currently more likely that Truss will not even survive the political winter. A divided parliament (including inside the Tories) is only one of her various challenges. 

Truss is the first prime minister with the support of a majority of her party members but not a majority of the Conservative MPs, with whom she now has to govern. Many preferred Rishi Sunak and have only changed sides over the past two months as it became increasingly apparent that she would win the membership vote. However, this form of opportunism could quickly become a boomerang as the latter doesn't entail genuine loyalty. 

Then there is the economic situation. Household energy prices will almost double by October 1 and are expected to rise further and even triple at the beginning of 2023. 

Millions of British consumers in the lower- to middle-income brackets can no longer afford these prices. According to estimates, around 12 million Britons will probably fall into the so-called “energy poverty” in the next few months while also facing a rise in food prices that continue to pressure British low-income earners.

Although Truss previously announced that she intends to counteract this with caps, the additional spending will still be clearly felt. Due to the costly Covid aid packages during the pandemic, Britain's capability to soften the blow for its people has decreased significantly. 

Meanwhile, Truss’s vision to restart Britain’s economy via trickle-down economics is seen as sceptical by various economists. The latter is particularly worrisome, as inflation in the country is currently around 10 percent, driven by energy costs, and could climb to as much as 18 percent, according to Bank of England projections.

How will it relieve the burden on the citizens? How much leeway is there for tax cuts? And how is the promise to increase the defence budget from 2 to 3 percent of gross domestic product to be financed? The national deficit ballooned already under Johnson. The prospect of an even more frivolous debt policy and hints at regulatory intervention in monetary policy is already being viewed with concern in the financial markets. The financing of Truss’ promises is in question, especially since the era of negative interest rates is over. They are also likely to exacerbate high inflation; solid state finances and stable prices were still central to Truss's great role model, Margaret Thatcher.

Another pressing domestic topic remains migration. Truss would like to continue the Johnson government’s migration policy, which seeks to send asylum seekers to Rwanda. To facilitate this, Great Britain could leave the European Convention on Human Rights as the aforementioned plans violate the convention. Opting out of the convention is a step that only Putin’s Russia has taken so far. 

However, Truss’s intentions seem clear, considering she appointed Suella Braverman as Home Secretary. Braverman, part of the conservative party’s ring-wing, supports the UK’s withdrawal from the European Convention on Human Rights and sending cross-channel migrants to Rwanda.

On the international stage, British support to Ukraine by supplying arms and training Ukrainian soldiers will continue. Truss will also continue to support Ukraine diplomatically, as she has taken an extremely resolute line towards Russia.

It is to be expected that, like Johnson, she will strive for close relations and cooperation on security policy with the Baltic and Scandinavian states and Poland. Due to their historical experience and geographic location, all countries take the Russian threat just as seriously as they do.

Truss is also expected to clearly differentiate herself from China. According to reports, her government plans to officially classify China as a national security risk, just like Russia. In doing so, she considers an apparent change within the conservative party. A few years ago, China was considered one of the most important partners. 

But that has changed after the pandemic, the crackdown on protests in Hong Kong, and the boycott of human rights violations against the Uyghurs in Xinjiang. Meanwhile, the conservatives almost unanimously perceive China as a threat. Many support the idea of decoupling, the dissolving of mutual economic ties. Truss could become the PM to make this happen. The timing, however, arguably couldn’t be worse given the financial dilemma.

And then there is Brussels. Truss made a name for herself as a tough Brexit negotiator and drafted the Northern Island Protocol Bill. This means that further controversies with the EU are inevitable. From the EU’s point of view, the latter represents a violation of international law. In the worst case, the EU and Great Britain could become entangled in a trade war.

Can Great Britain afford an economic war with its largest trading partner right now? The answer is a clear no.

With a view to the upcoming general elections, which are due in 2024 at the latest, all these are deplorable conditions for Truss and her party. Labour leads the polls by an eight percentage point lead over the Tories. 

So how successful can Truss be with her ambitious goals, her confrontational style, and her methods at a time when British society is at the beginning of a deep economic crisis? Getting the country through the winter while surviving politically would be a start, but it certainly isn't a given.