UK’s Turmoil And Its Reverberations – OpEd


By Harsh V. Pant

To say that it has been a shambolic start to the innings of Liz Truss as British Prime Minister would be an understatement that even the British won’t approve of. It has been a full blown disaster at multiple levels – economic, political and even diplomatic. In less than two months of taking office, the Chancellor had to go to make way for one with a quite distinct economic philosophy. Jeremy Hunt who replaced Kwasi Kwarteng last week, after financial turbulence and political backlash made Kwarteng toxic, continues to insist that Truss is in charge but has already gone back on Prime Minister’s promise of scrapping the top income tax rate and a freeze in corporation tax. There are open discussions in the corridors of power in Westminster as to how long can Truss last and Tory MPs are reportedly working on ingenious measures to make her leave office.

The Bank of England is warning that interest rates may need to rise by more than previously expected as inflation is increasing at almost its fastest rate in 40 years. The US President, Joe Biden, has called Liz Truss’s original economic policies “a mistake” and said the economic turmoil that followed the government’s mini-budget had been “predictable.” Even the head of the UK’s supermarket chain, Tesco, has openly come out and said that the Conservatives “did not have a growth plan” and is warning of the challenges as a result of rising cost of living.

The authority of Truss has disappeared as quickly as she had garnered it when she won the leadership contest against Rishi Sunak who had warned of the dangers of Truss’s reckless economic views. But her ideological conviction in cutting taxes had won her the support of the Conservative party rank and file. Once in office, she went ahead and tried to execute it, resulting in the ensuing disaster. The new Chancellor Jeremy Hunt has admitted that his predecessor’s mini-budget went “too far, too fast.” Kwarteng had to be the scapegoat to protect Truss but despite his departure, the sense of doom and gloom in the Conservative Party is a reflection of the serious rot in governance that Britain is facing at the moment.

Britain had always been a nation of serious policy. Even in the worst of times, there was a steadiness in the way British policymakers managed crises and achieved results. Its governance was one of the reasons it managed to punch above its weight in global politics. But today there are questions within and outside the UK as to who is in charge of the nation where policies are being made not through the process of careful consideration but through an out and out ideological lens. A Prime Minister not in charge, a Chancellor of the Exchequer who doesn’t understand basic economics, a ruling party that is in a state of a virtual meltdown and public looking askance as to what they had bargained for.

The story of Britain over the last few years has been one of one disaster after another. Brexit was a huge shock to the system and the nation is yet to recover from the costs imposed by moving out of the European Union. Whatever the political arguments be, the economic rationale today looks quite weak and there has been no attempt by British policy makers to come to terms with this big shift in substantive ways. Boris Johnson’s term that started off on such a great political majority ended up with a series of scandals and the party has not been able to find a suitable successor. In the meanwhile, the Labour Party under Keir Starmer, has been on an offensive, emerging as the party of governance. It has capitalized on the political chaos ushered in by the Tories inability to get their act together and looks set to emerge as the winner in the next general election, likely to be in December 2024.

This malgovernance is already having profound consequences for the global reputation of Britain. For all the talk of a post-Brexit foreign policy, London is struggling to move beyond navel gazing. Without getting its domestic economic situation together and proving a politically cohesive government, few will take Britain’s Indo-Pacific ‘tilt’ seriously. For a country like India, that had welcomed a proactive British posture in the Indo-Pacific, this is not a particularly welcome development.

But even when it comes to ties with India, the Truss government has been more confused than strategic. Though Liz Truss had committed to getting the ambitious India-UK trade deal done after her predecessor Boris Johnson had set the deadline preferably by Diwali but “definitely by the end of the year,” her home secretary Suella Braverman has ensured that the deal finalization might end up taking more time than initially envisioned. Her publicly expressed concerns about having an open borders migration policy with India “because I don’t think that’s what people voted for with Brexit” and her targeting of Indian migrants as “the largest group of people who overstay” may have more to do with her positioning herself as a challenger to Truss within the Tory Party but it has vitiated the political climate when it comes to India-UK bilateral ties. Skilled workers mobility is a key issue for India and New Delhi will be in no hurry to proceed without it.

What is striking is that even here a Tory loss is likely to be a Labour gain. Starmer is going all out in wooing India and its diaspora after years of neglect under his predecessor, Jeremy Corbyn. And he has made all the right noises in fighting discrimination and prioritizing trade links.

Britain may be passing through an unprecedented political turmoil, primarily because of the inadequacies of Truss’s leadership and internecine Tory rivalry, New Delhi only needs to be patient as it negotiates with London for a ‘win-win’ outcome.

This commentary originally appeared in Financial Express.

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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