(Bloomberg) -- Former UK leader Liz Truss urged her successor Rishi Sunak to cut taxes ahead of the next election, demonstrating how the Prime Minister is facing calls for policy changes from some in his own party to win over voters.
Almost exactly a year after Truss’s short-lived government published its ill-fated mini-budget, the ex-leader criticized some of Sunak’s tax policies while arguing that the Conservative Party was allowing economic debate “to be framed and led by the left” of the political spectrum.
“Investment wouldn’t have faltered in the North Sea were it not for the windfall tax,” Truss said Monday in London, attacking a decision to impose a levy on the profits of oil and gas companies in May last year when Sunak served as Chancellor of the Exchequer. “We would’ve got moving on fracking and lower energy bills would now be on the horizon.”
While Truss has remained on the fringes of UK politics following her short, disastrous term as prime minister, her comments echo the sentiment of sections of the Tory party. After facing ridicule when her own fiscal plans sent financial markets into a tailspin, she has since been keen to defend her record, and even has a book entitled “Ten Years to Save the West” slated for publication next April.
Her attack on Sunak comes as the current prime minister faces criticism from both right and left of the political divide, amid fractures in his own party. While Sunak and his supporters are advocating fiscal prudence, Tory critics claim he should be cutting taxes to boost economic growth.
The turmoil within the party have caused it to lose the faith of global investors, with about two-thirds of finance professionals saying an outright win for Keir Starmer’s center-left party or a Labor-led coalition would be the “most market-friendly outcome,” according to a Bloomberg survey released on Sunday.
Truss said the government has scope to reduce expenditure by reducing benefit increases, raising the retirement age and delaying commitments to net zero.
“There is a consensus at the moment about the level of tax” and the size of government, Truss said Monday. Breaking that consensus would be difficult but unless the government did so “the country is headed for continual stagnation,” she said.
Former Bank of England governor Mark Carney said that some pro-Brexit Conservatives had a “basic misunderstanding of what drives economies.”
Truss’s government was on course to turn Britain into “Argentina on the Channel” rather than the low-tax, low-regulation “Singapore-on Sea” that they were aiming for, Carney told the Global Progress Action Summit in Montreal on Sunday.
In response, Truss said Carney was “part of the 25-year economic consensus that has led to low growth across the Western world” and was “no doubt defensive.”
(Mark Carney, a former governor of the Bank of England, has been named chairman of Bloomberg Inc.’s board of directors.)
--With assistance from Lucy White.
(Adds Carney comments from 9th paragraph)
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