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Former UK prime minister Liz Truss considered sacking Andrew Bailey, Bank of England governor, as part of her attempt to dismantle an “economic establishment” that she says helped to bring her down.
Truss, in a new book, reveals the extent to which her relations with Bailey broke down during her shortlived premiership, when Britain faced a market meltdown in the wake of her “mini” Budget.
She said the BoE, the Treasury and the Office for Budget Responsibility, the independent fiscal watchdog, were “fatalistic about Britain’s decline” and “more interested in balancing the books than growing the economy”.
Truss’s book Ten Years to Save the West claims that Bailey, in effect, blocked the appointment of an “outsider” as the Treasury’s top official because he feared “an adverse market reaction”.
Asked if she thought about dismissing Bailey, Truss told the Financial Times: “Yes.”
“I was a democratically elected prime minister and Andrew Bailey is an appointee with an eight-year term, which makes him very hard to sack,” she added.
Truss, who succeeded Boris Johnson as prime minister in September 2022 but lasted only 49 days in Number 10, decided not to sack Bailey because “that would have created a market crisis as well”.
Truss writes in her book that September 23, 2022, when her chancellor Kwasi Kwarteng delivered the ill-fated “mini” Budget, was “probably my happiest moment as prime minister” and that she was “ecstatic”.
Markets reacted badly to the £45bn package of unfunded tax cuts. Government gilt yields rocketed, at one point pushing the cost of a new mortgage above 6 per cent. Within days, the BoE was forced to intervene to save the pensions industry from collapse.
Truss claims the central bank should have known about the vulnerability of the pensions sector and that Bailey was one of those who told her she had to abandon her economic plan to avert disaster in the markets.
She also says that she and Kwarteng were thwarted in their plan to appoint Antonia Romeo, permanent secretary at the justice department, to replace Sir Tom Scholar, whom she had sacked as the top official at the Treasury.
Romeo had not previously worked at the Treasury and Truss claims the economic establishment — which she has labelled “the Deep State” — fought to ensure veteran Treasury official James Bowler got the job instead.
“I still resented the fact that I had been obliged to block the chancellor’s preferred candidate at the behest of the bank governor, Andrew Bailey, who warned of an adverse market reaction,” she writes.
Truss accepts in the book that “communications around the ‘mini’ Budget were not as good as they could have been” but otherwise holds others mainly responsible for the economic meltdown that followed.
The Treasury, the BoE and the OBR declined to comment.
She also recalls the moment she was told about Queen Elizabeth’s death soon after entering Downing Street: “To be told this on only my second full day as prime minister felt utterly unreal. In a state of shock, I found myself thinking: ‘Why me, why now?’”
On Monday night Truss declined to rule out running again for the Tory leadership, telling LBC: “I have unfinished business and I think the Conservative party has unfinished business.”
Truss is standing again for parliament in her South West Norfolk seat in the general election expected this year. But shadow cabinet minister Jonathan Ashworth said: “The prospect of Liz Truss returning as Tory leader will send shivers down the spine of working people.
“Homeowners are still reeling after the Conservatives crashed the economy and sent mortgages rocketing by hundreds of pounds every month.”
