PANNED AND SEARED — Not long into her tenure, British Prime Minister Liz Truss’ chancellor, Kwasi Kwarteng, unveiled a catalog of unfunded tax cuts — the largest in 50 years — as part of a “Growth Plan.” Markets recoiled. The pound hemorrhaged value, almost reaching a historic parity with the dollar. Government borrowing costs spiked along with mortgage rates. The IMF stepped in to issue a sharp warning that the proposals in the so-called mini-budget would exacerbate the U.K.’s cost-of-living crisis. Prominent critics came out of the woodwork. Even President Joe Biden, holding a chocolate chip waffle cone in an Oregon Baskin Robbins, said that Truss made a “mistake,” and the consequences were “predictable.” On Friday, Truss fired Kwarteng, subbing in Jeremy Hunt — who went ahead and tore up most of what remained of Truss’ mini-budget on Monday. While markets are responding positively to the reversal in policy, Truss’ reputation remains in shreds. Tory MPs have publicly called upon her to resign, and many more are understood to have submitted letters of no confidence. Latest YouGov polling shows Truss’ net approval at -70 — the lowest in history, 17 percentage points below her disgraced predecessor Boris Johnson’s worst score and almost as low as the rating for Russian President Vladimir Putin. The mini-budget fiasco may or may not prove fatal to Truss, but the damage to the Conservative Party is wide and deep. “The government has completely lost its credibility on its ability to manage the economy and to be seen as a solid custodian of people’s money,” said Mark Leonard, director of the European Council on Foreign Relations. The public won’t forgive quickly, Leonard added, citing the plummeting popularity the Tories suffered after Black Wednesday, when a 1992 collapse of the pound forced Britain to withdraw from the European Exchange Rate Mechanism. “A cliche is that the Tory Party’s purpose is to be economically competent. If it loses that, people start to ask, ‘What’s the point in the Conservative Party?’” said Garvan Walshe, former national and international security policy adviser for the Conservatives. Indeed, a recent poll-of-polls predicted that Labour would seize a landslide 507 seats if a general election were held today, and the Tories would fall behind the SNP to third place, with 48 seats. In an interview Monday, Truss apologized for “mistakes” made, claiming that she had “fixed” them. She also vowed to “lead the Conservatives into the next general election,” scheduled for January 2025 at the latest. Beyond the domestic calamity, the Conservatives face an uphill battle convincing the rest of the world that the U.K. is a country to be taken seriously. The mini-budget drama has been “extremely damaging to British reputation abroad,” Leonard said. Global expectations are that U.K. macroeconomic policymaking should be at least somewhat consistent and professional — yet Truss’ policy circus and the monthslong merry-go-round of job-hopping Tories smacks of a government losing control. Aside from Biden’s comments in the ice cream parlor, other leaders have weighed in, some tongue-in-cheek: The Greek Prime Minister, Kyriakos Mitsotakis, told the Sunday Times: "If you need experience in dealing with the IMF, we are here to help!" The Egyptian delegation at a D.C. IMF meeting reportedly joked that their pound had brighter prospects than the British counterpart. But behind every joke there is some truth; mini-budget fallout has “created a sense in many international debates that Britain is now like an emerging economy,” Leonard added. The recent fiasco is compounded by previous knocks to the U.K.’s global credibility — notably, Brexit. “Truss and her team hadn’t really understood how Britain’s international reputation had already been damaged by Brexit,” said Walshe. While the Conservatives may have been able to get away with the raft of tax cuts pre-Brexit, the U.K. is now “associated with a more unreliable type of political economy,” he added. Biden, in particular, has been trying to move away from the sort of Reaganite economics reflected in the “Trussonomics” mini-budget, said Leonard. In this way, the plan’s utter failure should reassure America that trickle-down policies are a no-go in the current economic climate. Whether Truss is ousted or not, the Conservatives face a reputation struggle domestically and globally. Rebuilding trust begins at home: By and large, governments that “have strong support from the population have more credibility on the international stage,” said Leonard. Projecting “stability and policy continuity,” said Walshe, will also be important. Yet that is unachievable as long as the domestic situation remains volatile. Probabilities based on Betfair Exchange wagers give a 1-in-3 chance that Truss will stay in Downing Street for the remainder of the year. Just six weeks into her premiership, she has managed to become the least popular prime minister in recent history. In aiming at “ Britannia Unchained ,” the U.K.’s prime minister has done nothing less than forge her own cage. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight’s author on Twitter at @ella_louise_c .
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