The Conservative party is heading into its annual conference amid the catastrophic fallout from Chancellor Kwasi Kwarteng’s mini-budget. The decision to cut tax without a plan to pay for it caused a sharp fall in the value of the pound on currency markets, which reached an all-time low against the dollar in Asian markets, and a rapid rise in costs of government borrowing. Both are indicators of the strongly negative reaction of financial markets to the mini-budget.

Party members, who were, after all, the ones who chose Truss as prime minister, will now be wondering whether their choice (and the abrupt change of direction in economic policy it enabled) will cost them the next election. And they are right to be worried.

According to the most recent YouGov survey Labour is a staggering 33% ahead of the Conservatives in voting intentions, gathering 54% of the vote in total. If sustained, that would give the party a majority in the House of Commons larger than Tony Blair’s victory in 1997.

It is worth remembering the last time the Conservatives lost the confidence of the voters in their ability to manage the economy. This was on “Black Wednesday” in September 1992, when the British government lost control of the pound. A collapse in its value forced Britain out of Europe’s shared monetary system, causing market chaos. They did not regain that confidence until David Cameron became the leader in 2005.

Only 19% of respondents in a poll conducted just after the recent announcements took place thought the mini-budget would make them better off and 29% thought it would make them worse off. That said, 53% thought that the measures would make no difference to them or that they did not know the effects, indicating that at that stage the jury was out for many voters.

Haunted by history

Comparisons have been made with Conservative chancellor Anthony Barber’s budget of 1973, when Edward Heath’s government massively increased public spending with the aim of stimulating economic growth at a time when inflation was rising.

Read more: https://theconversation.com/liz-truss-are-the-conservatives-facing-an-electoral-meltdown-191626