I examine the events which took place on ‘Frantic Friday’, 14th October 2022 as a case example of a critical political leadership event in the UK.
Friday 14 October.
Overnight, the Chancellor of the Exchequer, Kwasi Kwartang (KK) has cut short his American trip, and is returning for crisis discussions with Prime Minister Liz Truss. Rumours of his sacking develop as the press circus starts to camp out at the entrance to 10 Downing Street.
News leaked that KK is to resign as Chancellor, or be sacked. BBC TV News is on full political crisis alert. The BBC1 Politics Live show has its customary spectrum of opinion pundits. The pundit describe KK’s departure as a profound political crisis. The markets, with help from her own MPs, had forced another U turn, leaving her policy for growth in tatters.
Presenter Jo Coborn seeks to find balance by suggesting to Emily Thornbury that the Labour Party will now have to say what they would do next week to calm the market. (Jo has learned her skills at appearing neutral from her predecessor Andrew Neil):
‘Surely you can’t just be reactive? Your borrowing with its climate plans would still cost 100 billion. There’s going to be a lot more scrutiny on Labour. I spoke to John Redwood, who said for people to calm down’
Thornbury says the issues go more deeply than this month’s mini budget.
The news is arriving too quickly to assimilate. Twitter users are already identifying 9 or 15 December as date of a general election. Financial markets remain calm, interpreted as expecting a reversal of unfunded tax-cuts policy.
A tweet from the BBC’s political reporter Nicholas Watt. His sources suggest that after KK’s departure, MPs are telling him they have enough support to force the PM to resign.
A press conference is to take place at 2.00pm
KK’s letter makes it clear he has been asked to step down. Vows his continued support for the PM and her policies. Not clear why he was sacked, or the reasons he has resigned. His letter could have been written as if there had been a metaphorical gun held to his head. An offer he couldn’t refuse? A letter written before he read it? KK’s junior ministers have also cleared their desks and collected their belongings at the Treasury.
Press conference has been rearranged for 2.30pm. Nice diversion, with a photo of Larry the Downing Street cat. He has starred in a video capturing him seeing off a skulking fox, earlier in the week.
PM’s letter to KK released. Sorry to lose him. He has put the country first. Still not clear why he resigned. BBC News announces Jeremy Hunt has been appointed Chancellor.
The Press conference (abbreviated comments)
‘Our potential has been held back by low growth.
But clearly we went further and faster than we expected.
I have decided to keep the tax payment agreed by the last government. [major U turn].
I was terribly sorry to lose the former Chancellor.
I have asked Jeremy Hunt to replace him.
I have acted decisively … I will be honest’
Telegraph: Why should you remain PM?
PM: I’m determined to see us through this storm.
The Sun: He has to go. How come you stay?
PM: I had to make the difficult decisions I made.
The BBC: What credibility do you have?
PM: I’ve made sure by acting decisively we can achieve stability.
ITV: Will you apologise to your party
PM: I was right in the decision I made to make sure of the country’s long term stability.
Questions ended, to cries of dissatisfaction from the majority of press pack unable to obtain a quote for tomorrow’s headlines.
Market trackers report that in the morning, markets rallied with hope of reversal of government policies. During the PM’s press conference, a reverse started which wiped out the morning’s gains. Any attempt by the Government to reassure the markets was not working
What went wrong?
What went wrong? In less than a month after her election, polls were suggesting that her party was heading for a monumental defeat in the next general election. Her popularity among her MPs was never high. She began with a weak political hand.
Within a week her ambitious plans for growth were announced to the world in KK’s mini budget with no explanation how it would be funded. There followed a market crash, panicky interventions from the Bank of England, higher mortgage rates, various statements described as U turns, but defiance from the PM and her chancellor claiming that her basic plan remained intact.
Two critical incidents
1 The mini-budget leads to severe turbulence in markets, with a loss of confidence in the £ and in the government.
2 Today’s events starting with KK’s departure and Truss’s announcement of her position failed to secure approval from the markets or political commentators, even from her own MPs..
To be continued. A few initial thoughts.
I have studied the rise and fall of leaders in numerous posts on this site. My preference is to start with a closer examination of the events primarily covered in any specific post. Later, connections with historic examples can be made.
These notes are likely to stand alone as an example of how initial plans of a new leader can be destroyed on contact with realities. In this case the realities of the immediate reaction of financial institutions (bad) and the markets themselves.
A more charismatic figure would have retained support from influential groups including her own MPs.
A more cautious one would have avoided the temptation to hit the ground running.
One irony is that the low growth of the British Economy is another reality which is now more recognised as a possible mayor factor around which consensus could by reached.
Unfortunately, there is always the possibility of a powerful desired vision succeeding over the promise of ‘blood, sweat and teams’. Although even that worked for one charismatic leader having to deal with an existential threat.
A dilemma of leadership pointed out by a financial analyst:
The government appears to be promising U.K. levels of taxation with European levels of public services. A European leader says dismissively ‘It’s like a car running out of control with two drivers trying to move the steering wheel in opposite directions’.