London Daily

Focus on the big picture.
Tuesday, Feb 17, 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
UK Markets Signal Opportunity as Starmer Confronts Intensifying Political Pressure
Trump Criticises Newsom’s UK Climate Pact, Defends Federal Authority Over Foreign Engagements
UK’s Top Prosecutor Says ‘No One Is Above the Law’ as Police Review Claims Against Ex-Prince Andrew
Businessman Adam Brooks weighs in on the reports that the US is set to help Hamit Coskun flee the UK, over free speech concerns
U.S. Attorney General Pam Bondi Releases 3.5 Million Pages of Jeffrey Epstein Case Files
US Secretary of State Marco Rubio Comment on European allies report blaming Russia for killing late Kremlin critic Alexei Navalny using toxin from poison dart frogs
Eighty-Year-Old Lottery Winner Sentenced to 16.5 Years for Drug Trafficking
UK Quran Burner May Receive Asylum in the US Amid Legal Challenges
Rubio Calls for Sweeping U.N. Reform, Saying It Has Failed to End Wars in Gaza and Ukraine
10,000 Condoms Distributed at Winter Olympics 2026 Athlete Village Depleted Within 72 Hours
Poland's President Advocates for Evaluating Independent Nuclear Weapons Development
Prince William Meets Saudi Crown Prince as Epstein-Andrew Fallout Casts Shadow
Starmer Calls for Renewed ‘Hard Power’ Investment at European Security Summit
UK Police Establish National Taskforce to Handle Domestic Epstein-Linked Allegations
UK Court Rules Ban on Palestine Action Unlawful in Major Free Speech Test
UK Faces Prospect of Net Migration Turning Negative as Economic Impact Looms
Mayor of Serdobsk in Russia’s Penza Region Resigns After Housing Certificates Granted to Migrant Family Trigger Public Outcry
Pentagon Reviews Anthropic Partnership After Claude AI Reportedly Used in Operation Targeting Nicolás Maduro
President Donald Trump and Hip-Hop’s Political Realignment: Pardons, Public Endorsements, and the Struggle Over Cultural Influence
China’s EV Makers Face Mandatory Return to Physical Buttons and Door Handles in Driver-Distraction Safety Overhaul
Goldman Sachs and DP World Executive Resignations: Elite-Reputation Risk and Corporate Governance Fallout From the Epstein Disclosures
‘Amelia’: The UK Government’s Anti-Extremism Game Villain Who Became a Protest Symbol
Peter Mandelson Asked to Testify Before US Congress Over Jeffrey Epstein Links
Walmart's Earnings and UK Economic Data Highlight Upcoming Financial Trends
UK Green Party Considering Proposal to Legalize Heroin for an Inclusive Society
SpaceX's New Vision: Lunar City Takes Precedence Over Mars Colonization
OpenAI and DeepCent Superintelligence Race: Artificial General Intelligence and AI Agents as a National Security Arms Race
Document Suggests Prince Andrew Shared UK Briefing on Afghan Investment Opportunities with Jeffrey Epstein
We will protect them from the digital Wild West.’ Another country will ban social media for under-16s
McDonald's Shortens Breakfast Hours in Australia Due to Egg Shortage
Heineken announces cut of 6,000 jobs due to declining beer demand
Beijing Brands UK Hong Kong Visa Expansion ‘Despicable and Reprehensible’ After Jimmy Lai Sentencing
Tesco Chief Warns UK Is ‘Sleepwalking’ Toward a Joblessness Crisis
Trump’s ‘Act of Great Stupidity’ Comment on UK Chagos Deal Reverberates Through Diplomacy and Strategy
New U.S. filings say Jeffrey Epstein repaid Les Wexner one hundred million dollars after theft allegation
Commerce Secretary Howard Lutnick acknowledges 2012 visit to Jeffrey Epstein’s private island as lawmakers scrutinise past ties
Helsing and Stark Defence loitering-munition drones and Germany’s race to industrialise battlefield autonomy
UK orders deletion of Courtsdesk court-data archive, reigniting the fight over who controls public justice records
UK Police Review Fresh Claims Involving Prince Andrew as Senior Royals Respond to Epstein Files
Keir Starmer’s Premiership Faces Unprecedented Strain as Epstein Fallout Deepens
Starmer Vows to Stay in Office as UK Government Faces Turmoil After Epstein Fallout
China and UK Signal Tentative Reset with Commitment to Steadier, Professionally Managed Relations
UK Confirms Imminent Increase in ETA Fee to £20 as Entry Rules Tighten
UK Signals Possible Seizure of Russia-Linked ‘Shadow Fleet’ Tanker in Escalation of Sanctions Enforcement
Epstein Scandal Piles Unprecedented Pressure on UK Prime Minister Keir Starmer’s Leadership
UK’s ‘Most Romantic Village’ Celebrates Valentine’s Day and Explores the Festival’s Rich History
The Implications of Expanding Voting Rights to Non-EU Foreign Residents in France
Ghislaine Maxwell to Testify Before US Congress on February 9
Al.com Acquired by Crypto.com Founder for $70 Million
Apple iPhone Lockdown Mode blocks FBI data access in journalist device seizure
×