Year in a word: Trussonomics

(noun) a radical programme of libertarian free-market economics based on unfunded tax cuts. To be handled with great caution.

Liz Truss’s fleeting stint as British prime minister will be remembered chiefly for her failed efforts to reshape decades of economic orthodoxy and ruining the mortgages of millions. Her place in political history is secured by a portmanteau; a grave warning to future policymakers.

Truss’s political rise began from an intellectual milieu of libertarian think-tanks who preached aggressive economic expansion through lower taxes and supply-side reforms. They believed that slashing taxes, including for the richest, was vital to creating a more dynamic economy.

Despite the global downturn, Truss argued now was the right time to “go big or go home”, to “move fast and break things”. With just a couple of years until Britons are due to go to the polls again, she argued that undoing decades of centrist thinking was the only route to a fifth historic victory for the Tories.

The dictum of Trussonomics was that higher growth had to be achieved at all costs — even if it relied on the un-Conservative principle of more borrowing, no fiscal forecasts and zero institutional reassurances that the tax cuts would eventually pay for themselves.

And those costs proved very high. When Truss’s chancellor Kwasi Kwarteng unveiled the “mini” Budget in September, the markets rejected it. Sterling and gilts plummeted, knocking £300bn off the UK stock market.

Its fans have been reluctant to acknowledge the damage the experiment wrought. Truss herself has recently told friends she will continue the fight for slashing taxes and remodelling the British state, despite the agenda earning her the dubious title of the shortest-ever serving prime minister.

The real problem, true believers will soon be arguing, is not Trussonomics itself. It is that real Trussonomics has never been tried.

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