Liz Truss has acknowledged she and her government lost the confidence of financial markets following the mini-budget of October 2022 – but has refused to apologise to homeowners for higher interest rates.
Talking to Sky News, the former prime minister blamed her downfall on the Bank of England, primarily governor Andrew Bailey. However, she said she did not meet Mr Bailey once during her time in office.
“I actually had a meeting set up – I wanted to meet him,” she said. “But I was advised that would be a bad idea. And perhaps I shouldn’t have taken that advice.
“But that advice came from the cabinet secretary and what I didn’t want to do is further exacerbate the [market] problems.
“In retrospect, yes, I probably should have spoken directly to the governor of the Bank of England at the time.”
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Asked about the aftermath of the mini-budget, at which her chancellor Kwasi Kwarteng announced a series of unfunded tax cuts, without presenting evidence of how he would pay for them, Ms Truss said: “It’s fair to say that the government did not have the confidence of the markets…
“But if you have organisations within the state, like the Bank of England, like the Office of Budget Responsibility, who are pretty clear to people they don’t support the policies that are being pursued and are essentially undermining those policies, then it is difficult to command the confidence in the markets – because the markets look to the government for that leadership.”
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A look back: Truss’s time as PM
During Ms Truss’s short time in office, the expected path for the Bank’s interest rate a year ahead rose from below 4% to around 6%.
While those rates were increasing before the fiscal event, they shot up dramatically in the wake of the mini-budget, rising even further when, a few days later, Mr Kwarteng promised even more tax cuts.
That sharp increase in interest rates precipitated a short-lived crisis in UK financial markets, which triggered the near collapse of liability-driven investment (LDI) funds which underlie the pension market.
Asked whether she would apologise for the sharp rise in interest rates during her time in office, Ms Truss said: “I question the premise of what you’re asking me, because mortgage rates have gone up across the world.
“The issues that I faced in office, were issues of not being able to deliver the agenda because of a deep resistance within the establishment.”
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Liz Truss beside Kwasi Kwarteng at the mini-budget announcement in September 2022. Pic: UK Parliament/Jessica Taylor/Handout via Reuters
She continued: “I think it’s wrong to suggest that I’m responsible for British people paying higher mortgages. That is something that has happened in every country in the free world.
“I’m not saying that I got everything absolutely perfect in the way the policy was communicated. But what I am saying is I faced real resistance and actions by the Bank of England that undermine my policy and created the problems in the market.”
Ms Truss was talking to Sky News in Washington DC on the US leg of her publicity tour for her new book, Ten Years To Save the West.
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Since publication it has emerged that one of the quotes she used in the book, attributed to Mayer Amschel Rothschild, is in fact a fake quote, often used in an antisemitic context.
Ms Truss said: “I’m very sorry about that. It was a complete mistake. It was something I found online and I’ve said I’m very sorry to the British Board of Deputies for that.
“It will be removed from all future editions of the book and removed from the Online Edition.”
Asked whether she feels more at home in the US than in the UK these days, she said: “Well, I do like aspects of American politics. I believe that on economics the US has got it more right than the UK has.
“My heart’s in Britain. But I think you’ve got to be prepared to learn from other countries that have that success.”
You can watch the full interview with the former prime minister on Sky News’s Sunday Morning with Trevor Phillips programme from 8.30am this morning. Trevor is also joined by Energy Security and Net Zero Secretary Claire Coutinho, shadow justice secretary Shabana Mahmood and Reform UK leader Richard Tice.