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Sensemaker: What Truss does next

Sensemaker: What Truss does next

What just happened

Long stories short

  • Trump was ordered to give evidence to the January 6th committee (more below).
  • France’s Emmanuel Macron ruled out using nuclear weapons if Russia deploys them against Ukraine.
  • The first British woman to be repatriated from a Syrian detention camp arrived in the UK with her child.

What Truss does next

They’ve listened. They didn’t get it. Now, it’s (probably) too late. 

Liz Truss’ “abysmal” performance before the 1922 committee on Wednesday appears to have focused minds in Number 10. Having ruled out any further changes to the mini-Budget, Truss is now strongly expected to announce another major U-turn. But increasingly, Tories believe it is too late to save her. 

She spent much of her leadership campaign vowing to overturn former chancellor Rishi Sunak’s plans to raise corporation tax from 19 per cent to 25 per cent. The prime minister is now due to deliver a hastily-scheduled press conference, in which she is expected to row back on a core pledge not to raise corporation tax, as she attempts to restore faith in the markets – and her leadership.

  • Chancellor Kwasi Kwarteng has flown back from Washington, having cut short his meeting with the IMF. Tories enjoying a little gallows humour compared his journey back to that of Priti Patel’s torturous flight from Kenya when international development secretary, which was tracked by thousands before her eventual sacking. 
  • Kwarteng did not comment on the prospective U-turn, saying only that his “total focus” was on delivering the mini-Budget. He was slightly more forthcoming when it came to his own prospects, telling reporters he wasn’t “going anywhere”. 

While Tories are unconvinced his defenestration would save Truss, nothing – at this stage – can be ruled out. So what might she do next?

U-turn on corporation tax: This now appears the most likely move under consideration as Truss attempts to buy time, prevent a rebellion and save £18 billion. An announcement could come as early as Friday, and if it doesn’t the market’s verdict might be harsh. However, it would annoy remaining supporters, as it was central to her “low tax Liz” campaign.

U-turn on everything (except energy support): This would avoid having to explain where the £60 billion will be found to balance the books, and could be positioned as a genuine change of tack following her bruising address to MPs. But it risks cementing the idea of her premiership as an omnishambles.  

Sack Kwarteng: While the two are close allies, Truss could look to shift the spotlight onto her chancellor. But it risks creating a new enemy – and ultimately, backbenchers blame her more than him. 

Keep calm and carry on: There are some – a small minority – who believe the whole thing is overblown. Truss will be vindicated when the economy does start growing; she could still win an election. But this is not the prevailing view in Westminster. Indeed, this option carries the most risk to Truss and the Conservative party. 

Resign? Could she jump before she’s pushed? It would be a huge capitulation after such a short tenure, and would make her the shortest-lived PM in British history. Highly improbable – but not impossible.

What can MPs do? Theoretically, Truss has a year’s grace period before she can be challenged by MPs, but sources say this is “entirely academic”. In reality, a challenge could come at any time and backbenchers are in full plotting mode:

  • There are rumours that letters of no confidence have been written and may have been submitted. 
  • Julian Smith, the former chief whip, tweeted the dictionary definition of confidence on Thursday, while other MPs have said they are braced to submit if there is no change in approach. 
  • Once the threshold is reached, it triggers a confidence vote. The precise number is only ever known by the chairman of the 1922 committee Sir Graham Brady.  

On Wednesday, Truss said the “last thing we need is a general election”. Many Tory MPs would say the last thing needed is another membership vote – the only way to do this is to rally around a single replacement. The desire for a unity candidate seems to have centred on a joint Rishi Sunak-Penny Mordaunt ticket, an idea which has travelled from a Conservative Home column to the front page of the Times. Together they could oust Truss as Michael Howard ousted Iain Duncan Smith. 

But some Tories believe it’s wrong to try and circumvent the members. And, one source argued, with reselections taking place around the country, MPs might prefer to keep their members onside – at least for the next few months.  


CAPITAL ECONOMY, BUSINESS AND FINANCE

Inflation and the midterms
On the face of it yesterday’s US inflation numbers were bad for consumers, bad for homeowners and bad for Biden. Month-on-month inflation was down a tenth of a point, but year-on-year core inflation, which strips out food and energy, was up 6.6 per cent. The Dow dived on the assumption the Fed would respond with one and maybe two more 0.75 base rate increases by the end of the year. But then it bounced back. There seem to be three reasons: “shelter” costs (rent or rent equivalent) are factored into core inflation rates, and are actually falling even though there’s a lag before that registers in official data. World gas prices are not factored into core inflation, but they are falling too. And stock traders are looking for the bottom of a market that’s been heading down since August. Biden and the Democrats will pay dearly next month if inflation feels out of control and market-linked 401(k) retirement accounts are still losing value. But if not – big if – there could be some surprises.


TECHNOLOGY AI, SCIENCE AND NEW THINGS

Beam us up
How about a hologram chat instead of a Zoom call on the one hand or a ten-hour flight on the other? Step into a booth, dial up the other side of the world and talk to a friend or colleague as if they were pretty much in there with you. The technology isn’t all that new but it has taken a long time to find a market. It’s still not there yet, but a Google project called Starline, not to be confused with Musk’s Starlink (below), is expanding from prototype phase to trials in other tech-ish companies in the US. Starline calls take a lot of bandwidth. They use multiple high-res cameras and what Techcrunch calls a “breakthrough light field display” to render people in 3D, and unlike Zoom calls they have to be one-on-one, for now. But where Abbatars lead, mortals will surely follow. 


The 100-year life health, education AND GOVERNMENT

Cough syrup deaths 
Nearly 70 children’s deaths in The Gambia have been linked to cough syrups produced by an Indian pharmaceutical company. “Unacceptable” levels of diethylene glycol and ethylene glycol, which can lead to acute kidney injuries and death, were found in four products. Indian authorities have ordered Maiden Pharmaceuticals to halt production and the WHO has put out a global alert, but more children could still die. A Gambian police investigation found 8,538 of 50,000 bottles imported into the country via a US-based firm remain unaccounted for. The Gambia’s president, Adama Barrow, vowed to update drug import laws and to address a lack of drug safety testing. For parents like Wuri Bailo Keita, whose two year-old daughter was prescribed a paracetamol syrup for malaria and died less than a week later, it comes too late. 


Our planet CLIMATE AND geopolitics

Starlink tangle
Elon Musk was praised when he sent 20,000 Starlink satellite internet terminals to Ukraine to help counter the Russian invasion, but people are now starting to question the wisdom of putting so much of a country’s internet system into the hands of a mercurial billionaire. There have been reports of outages on the front lines, impacting efforts to liberate areas from Russian occupation (Musk says battlefield coverage is classified). He angered Kyiv after tweeting a peace plan that involved ceding territory to Russia – and which one source says followed a conversation between Musk and Putin. Musk’s company SpaceX has asked the Pentagon to pick up the tab for Starlink services in Ukraine, says CNN, at a cost of $120 million by the end of the year and up to $400 million over the next 12 months. The whole thing should act as a “big wake-up call” about our digital dependencies, Gillian Tett says in the FT. Quite.


CULTURE soCIETY, IDENTITY AND BELONGING

Trump’s subpoena
“None of this would have happened without him,” said Liz Cheney, Republican vice chair of the House committee investigating the Capitol riot on 6 January 2021, referring to former president Donald Trump. The committee argues that Trump is to blame for the events of January 6th and that he knowingly attempted to overturn the results of a democratic election. In what could be its last hearing yesterday, the committee (made up of seven Democrats and two Republicans) voted unanimously to order Trump to testify under oath. Trump seems unlikely to comply with the subpoena. Observers expect him to ignore it as long as possible, then issue a legal challenge, hoping meanwhile the Democrats lose the House next month. If they do, it’s curtains for the committee when the new Congress assembles in January. 


Thanks for reading. Please share this round, send us ideas and tell us what you think. Email sensemaker@tortoisemedia.com.

Catherine Neilan
@CatNeilan

Additional reporting by Phoebe Davis, Giles Whittell, Ella Hill and Jessica Winch.

Photographs Getty Images


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