London Daily

Focus on the big picture.
Friday, Sep 04, 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
Breeding Tropical Mosquitoes Discovered in East London
Sadiq Khan Agrees to Search of Digital Communications in Palantir Lawsuit
Scottish Protesters Call for Moratorium on AI Data Centre Expansion
Uber Drivers Bring London Class Action Over Algorithmic Management
Reform UK Accepts £4 Million Donation From Cryptocurrency Billionaire Pardoned by Trump
Justice Secretary Tightens Early Release Scheme to Exclude Manslaughter Offenders
Kemi Badenoch Reshuffles Conservative Team as Reform UK Pressure Grows
British Mortgage Rates Rise as Global Bond Sell-Off Pushes Up Borrowing Costs
UK Records Hottest Summer on Record in 2026
UK Government Urges Households to Stock Essential Supplies Ahead of Severe El Niño Risk
UK Prepares Targeted Sanctions Over Israeli Settlements in West Bank
Reform UK Faces Electoral and Police Scrutiny Over Foreign Donation Allegations
UK and France Expand Channel Migration Cooperation as Trade Tensions Surface
UK Marks Merchant Navy Day With Tribute to Civilian Seafarers
Burnham Pays Tribute to Two Police Officers Killed on Duty in Northern England
Booking.com Left Fake Downing Street Listing Online for Two Months, Which Says
Burnham and Macron to Review UK-France Cooperation on Channel Crossings
UK Business Confidence Improves Slightly but Investment Concerns Persist
Burnham Faces Pressure Over Future North Sea Oil and Gas Licences
Burnham Pushes Wider English Devolution Through ‘Number Ten North’
British Chambers of Commerce Raises 2026 UK Growth Forecast to 1%
Keir Starmer Resigns as Holborn and St Pancras MP, Triggering By-Election
UK Chancellor Faces Tighter Budget Headroom as Long-Term Borrowing Costs Rise
UK Government Weighs Thames Water Nationalisation as Financial Crisis Deepens
Prime Minister Andy Burnham Faces First Commons Questions Over Tax and Spending Plans
Eleven British Seafarers Receive Merchant Navy Medal
Which? Creates Fake 10 Downing Street Rental Listing to Expose Booking.com Vetting Weaknesses
BP Appoints New Chairman in Effort to Stabilise Leadership
Aberdeen Sells Hydrogen Bus Fleet at Heavy Loss After Green Transport Experiment
UK Records Hottest Summer on Record as Climate Change Intensifies Extreme Heat
Scotland Pledges to End Temporary Accommodation for Children and Build 111,000 Affordable Homes
DNO Agrees $396 Million Deal to Acquire Capricorn Energy
Uber and Wayve Launch UK’s First Supervised Autonomous Ride-Hailing Service in London
Britain Expected to Avoid New US Tariffs Targeting European Union
Middle East Conflict Pushes UK Energy Costs Higher and Revives Inflation Concerns
UK Growth Forecast Cut to 1% Through 2027 as Youth Unemployment Is Projected to Rise
Andy Burnham Links Weak UK Growth to Brexit in First Full Commons Session as Prime Minister
Keir Starmer Resigns as MP, Triggering Holborn and St Pancras By-Election
UK Business Confidence Improves but Remains Deeply Negative
Aberdeen Hydrogen Bus Sale Recovers Just Six Pence for Every Pound Invested
Which? Exposes Booking.com Verification Failures With Fake 10 Downing Street Listing
British Business Bank Invests Up to £46 Million in Deep-Tech Startup Fund
Scottish Government Puts Violence Against Women at Center of Legislative Program
FCA Eases UK IPO Rules to Strengthen London’s Listing Market
UK Likely to Avoid Next US Tariff Measures as Washington Targets EU
Macron Visits UK for Bayeux Tapestry Exhibition and Border Security Talks
British Chambers of Commerce Cuts UK Growth Outlook to 1% for 2026 and 2027
Keir Starmer Resigns as MP for Holborn and St Pancras, Triggering By-Election
Prime Minister Andy Burnham Unveils Devolution and Cost-of-Living Agenda
UK Borrowing Costs Surge as 30-Year Gilt Yield Reaches 5.88%
×