London Daily

Focus on the big picture.
Saturday, Aug 08, 2026

Trussonomics: The five key points - and will they work?

Trussonomics: The five key points - and will they work?

Liz Truss's economic plan represents perhaps the biggest shift in economic policy since the Conservatives came into power in 2010 - and is rooted in spending more and taxing less, to bring up growth.

The £100bn-plus energy relief package Liz Truss is expected to finalise this week is just one string in her economic bow.

Here are five things you need to know about Trussonomics, the nickname some are giving to the new prime minister's economic policy.

1. It's a huge policy shift


The first is that in one sense it represents perhaps the biggest shift in economic policy since the Conservatives came into power in 2010, replacing New Labour's gradual increases in public spending with the austerity programme of George Osborne. For Ms Truss's plan, according to Gerard Lyons, an economist close to their team, is a genuine departure from previous Conservative economic doctrine.

Whereas Mr Osborne, and essentially each of his successors through to Rishi Sunak, put a lot of store in fiscal rules and attempting to keep the deficit within a narrowish range, Ms Truss's plans are for something very different.

Says Mr Lyons: "It's about having a pro-growth economic strategy built on three "arrows": monetary policy that keeps inflation in check, fiscal policy that stabilises the economy, and a supply side agenda, very much focused on boosting investment and getting the incentives right - [meaning] low taxes and smart regulation."

Perhaps you've noticed something missing there. The emphasis is not so much on fiscal "discipline" as on fiscal stimulus: spending more and taxing less to bring up growth.

Ms Truss is not the first prime minister to have talked about bringing austerity to an end; but she is perhaps the first PM to have provided an economic framework about how that would actually happen.

One of the first things Liz Truss will need to address is the cost of living crisis facing Britons


2. Is it pro-growth?


The second thing you need to know about Trussonomics is that it's "pro growth".

Now, to some extent this is one of those tedious, empty phrases all chancellors trot out. No government is exactly "anti-growth", is it? Except that when you think about it, some economists might say that actually the past couple of governments might have been described as such.

Since nearly every economist argued Brexit would diminish economic growth, wasn't the prosecution of that policy anti-growth? Since London is the country's economic powerhouse, might "levelling-up" - the ambition of steering resources away from the capital - be seen as anti-growth?

Maybe - except for all they say about "pro-growth," it's not altogether clear the Truss administration will take a different stance on either levelling-up or Brexit. We shall see.

3. Will interest rates rise?


The third thing you need to know about Trussonomics is it is very likely to push up interest rates. That, all else equal, is what happens when governments spend more money. Independent central banks respond by pushing up the cost of borrowing.

It is, perhaps, no coincidence that in recent weeks, investors have begun to bet on interest rates rising up to 4.5 per cent next year.

To put that into context, back in February, they thought rates would peak at a mere 1.5 per cent. That is an extraordinary shift.

Much of it is down not to Trussonomics, but to the war in Ukraine and consequent increase in energy prices. Even so, another fiscal splurge will likely spur more aggressive action from the Bank.



4. Where will success hinge?


The fourth thing you need to know about Trussonomics is in the end, its success will depend not on anyone in the Conservative Party or indeed the wider electorate but the millions of faceless investors and capital merchants who provide capital for this country, its government and its businesses.

If the government is planning to borrow more to fund tax cuts and a major energy splurge, their faith (or lack thereof) is more needed than ever. Someone has to lend the UK all this money, after all. And that faith, in turn, is likely to be strongly influenced by the third thing about Trussonomics.

If the government begins to meddle with the Bank of England's remit, that might frighten investors.

5. The reality


The fifth and final thing you need to know about Trussonomics is there is a distinct chance it will never really happen.

Every government comes into office with big plans and bold promises about their ambitions. Every government then has to contend with "events" which get in the way.

In this case the "events" are so enormous they threaten to swap economic policymaking altogether: an energy shock greater than anything felt in this country in at least a generation, a recession as deep if not deeper than the one in the 1990s and an inflation shock which is far from being vanquished.

It is very likely the government is still wrestling with these issues and their aftershocks will come at the next election in 2024.

Trussonomics may just be another one of those made-up words we have forgotten in a few years' time.

Newsletter

Related Articles

0:00
0:00
Close
Trump-Era Policy Shifts Test the Boundaries of U.S. Institutions
UK Drought Cuts Harvests and Raises Food-Security Fears
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
US Health Secretary: “I’m Not Afraid of Germs — I Used to Snort Cocaine Off Toilet Seats”
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Australian Crew Evacuates Seriously Ill American From Antarctica in Midwinter Darkness
Trump’s Top General Seeks an Exit Strategy From Iran War, Report Says
Brock Lesnar Retires From Wrestling, Closing a Career of Rare Athletic Range and Lasting Controversy
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Trump Keeps Hegseth at Pentagon While Leaving Door Open for DeSantis
UK Clears Paramount’s Warner Bros. Discovery Deal, but US Trial Looms
UK Prosecutors Add 38 Charges Against Andrew and Tristan Tate
Taiwan’s President Joins Wartime Command Drill as China Pressure Grows
Saudi Arabia, Turkey and Pakistan Sign Mutual-Defence Pact
Government Orders Review of Prison Release Rules After Concerns Over Grooming Gang Offenders
Rail Disruption Continues Across North-West England Amid Infrastructure Problems and Engineering Closures
UK Tax Authority Proposes Broad Changes to Rules Governing Company Distributions
UK Government Moves to Protect Standing Areas Outside Pubs From Local Restrictions
Extreme Right-Wing Referrals Under UK Prevent Programme Rise 42 Percent
EU Citizens in UK Warned That Some Residency Rights May Have Been Granted in Error
Every Monitored Body of Water in England Fails Chemical Purity Standards, Government Data Shows
UK Scientists Create First Artificial Intelligence-Designed Viruses
England Orders Primary Schools to Identify Children at Risk of Becoming Disengaged From Education or Work
Government Moves to Close Prison Release Loophole Amid Concern Over Grooming Gang Offenders
UK Economy Shows Modest Growth Despite Energy Volatility and Global Supply Pressures
Police and Prosecutors Failed to Stop Sex Offender Who Later Murdered Two Women, Review Finds
Millions in England Face Longer Mental Health Waiting Times as NHS Providers Cut Spending
Met Office Warns of Heatwave as Temperatures Across England and Wales Could Reach 36 Degrees Celsius
HMRC’s 2029 Tax Shift Could Overlap Old and New Self-Assessment Bills
Thetford Disorder Prompts Expanded Police Powers Amid Asylum-Housing Protests
Cambridge Faces Calls for Independent Review of Jason Arday Appointment
Scotland’s ‘Cock of the North’ Woodland Is Being Felled After Wind Damage
Reform UK and Greens Unite Against Vast Solar Plans for Kent Marshland
New Zealand Draws Wealthy Americans With Revamped Investor Visa
Senate Panel Votes to Hold Anthony Fauci in Contempt After Fifth Amendment Testimony
Cambridge Professor Jason Arday Resigns as University Opens Inquiry Into His Credentials
Manchester Power Failure Disrupts Trains Across North West Into Friday
UK Fashion and Tourism Sectors Prepare for Strong Summer and Autumn Activity
London Residents Seek Appeal Against Approval for Chinese Super-Embassy Development
UK Environment Officials Issue Biosecurity Alert Over Rising Bluetongue Cases in Livestock
UK Charity Regulator Opens Investigations Into Donations Linked to Israeli Settlements
Gatwick Expansion and Chinese Embassy Plans Highlight Growing UK Infrastructure Disputes
UK Agriculture Authorities Warn of Rising Bluetongue Virus Cases Among Sheep Farms
UK Watchdog Finds Electronic Monitoring Failures Leaving Some Offenders Without Timely Alerts
Metropolitan Police Investigate Covent Garden Knife Attack That Injured Four Men
UK Government Confirms Severe Terror Threat Level as Prevent Programme Expands
Diageo Plans Guinness Expansion While Cutting Jobs Through Global Restructuring Programme
Bank of England Keeps UK Borrowing Costs Stable While Markets Await Future Rate Cuts
Gatwick Airport Wins Approval for Second Runway Expansion After Legal Challenges Fail
Apple Challenges UK Government Over Demand for Access to Encrypted iCloud Data
×