 "Britain's former Prime Minister Liz Truss speaks during a fringe event at Britain's Conservative Party's annual conference, in Birmingham, UK, September 30, 2024. File Image/Reuters")
Former United Kingdom Prime Minister Liz Truss has taken legal action against current PM Keir Starmer, issuing a cease-and-desist letter demanding he stop claiming she “crashed the economy.”
The letter, described as “serious and formal,” accuses Starmer of making defamatory statements that caused significant harm to Truss’s reputation and contributed to her losing her parliamentary seat in South West Norfolk during the general election.
The letter was first published by The Telegraph.
The controversy stems from Starmer’s repeated remarks during Labour’s election campaign, in which he criticised Truss’s seven-week tenure as prime minister and her economic policies. Truss’s lawyers argue that these statements were false, misleading, and made with the intent to harm her reputation, especially as she sought re-election.
What happened during Truss’s PM tenure?
The focal point of the dispute is Truss’s “mini-Budget” in September 2022, a sweeping set of tax cuts funded by borrowing. The announcement triggered turmoil in financial markets, leading to a sharp drop in the pound, skyrocketing borrowing costs, and declining investor confidence.
This series of events ultimately forced Truss to resign after just 49 days in office, making her the shortest-serving prime minister in UK history.
Truss’s lawyers argue, however, that the economic turmoil following the mini-Budget does not qualify as an economic crash. They cite a lack of decline in economic output or a rise in unemployment as evidence that Starmer’s claims are unfounded.
Economist Andrew Lilico, supporting Truss’s position, told Planet Normal: “There wasn’t any crash in the economy. The economy actually grew faster in the period immediately following the mini-Budget. The thing that happened immediately following the mini-Budget was that the economy performed well. So it’s just preposterous to claim that she crashed the economy.”
Truss’s legal team also points to regulatory failures by the Bank of England, specifically in its oversight of pension fund liability-driven investment (LDI) strategies. They argue that the Bank’s poor handling of the LDI crisis exacerbated market volatility, shifting responsibility away from Truss.
How has Starmer reacted to the Truss legal notice?
Starmer, undeterred by the legal notice, has remained steadfast in his position. A spokesperson for the Prime Minister was quoted by The Telegraph who indicated that he stands by his comments and has no plans to moderate his language.
“I’m not sure I’ve seen the detail of the letter, but from what I can gather, I don’t think the Prime Minister is the only person in the country who shares the view in relation to the previous government’s handling of the economy.
“And I guess the question is whether she’ll be writing to the millions of people up and down the country as well who felt like her economic record pushed their mortgage bills up,” the spokesperson said.
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Labour leaders, including Commons Leader Lucy Powell, have echoed this sentiment, stating that they “won’t cease and desist from telling the truth that [the Conservatives] crashed the economy.”
How is the UK economy now?
The legal spat between Truss and Starmer comes against a backdrop of renewed economic strain in the UK. Government borrowing costs recently climbed to their highest levels in 16 years, while the pound fell to a year-low.
Analysts warn that these developments could necessitate either spending cuts or tax hikes to meet fiscal targets. Labour Chancellor Rachel Reeves has already hinted that spending reductions, not tax increases, will be the primary focus in upcoming economic plans, reported The Telegraph.
Critics of the Labour government argue that Starmer’s accusations against Truss serve as a political distraction from ongoing financial challenges. Conservative shadow chancellor Mel Stride accused Labour of raising taxes without delivering tangible benefits to the public, further inflaming tensions between the parties.
What now for Liz Truss?
In her letter, Truss’s legal team has highlighted the importance of “basic civility” in political discourse, stating: “The publication of these statements is not only extremely damaging but also grossly defamatory and indefensible. We trust that you will respond accordingly and cease repetition of factually incorrect and defamatory statements about our client.”
Truss has taken to social media to defend her record, accusing Labour, the Bank of England, and the media of unfairly undermining her policies.
She has called the allegations a “smear campaign” and claimed that her budget reversal was a result of pressure from the “media establishment” and “deep state actors” resistant to her tax-cutting agenda.
While former UK PM Liz Truss seeks to rehabilitate her public image and refute accusations of economic mismanagement, Labour’s continued critique of her brief tenure reflects their broader strategy to hold the Conservatives accountable for years of perceived fiscal missteps.
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With inputs from agencies