London Daily

Focus on the big picture.
Saturday, Jul 11, 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
Scottish Fishing Industry Calls for Emergency Support Amid Rising Costs
UK Supports Stronger European Response to Russian Actions in Ukraine
Devon and Cornwall Police Release Suspect in Ann Widdecombe Murder Investigation
Scottish MPs Demand More Government Support for Fishing Industry
UK Aviation Sector Faces New Rules as Parliament Reviews Passenger Protection Reforms
King’s College London Disciplines Students Over Pro-Palestine Campus Protests
Ministry of Defence Expands Military Capabilities Through New Precision Strike Investment
United Kingdom Condemns Russian Treatment of Ukrainian Children at International Security Forum
House of Lords Reviews Civil Aviation Bill to Strengthen Passenger Rights and UK Aviation Competitiveness
UK Aerospace and Defence Industries Contribute Nearly Forty-Seven Billion Pounds to Economy
UK Government Advances Consultation on Possible Social Media Ban for Children Under Sixteen
United Kingdom Ratifies Global High Seas Treaty to Protect Marine Biodiversity
United Kingdom Joins United States Precision Strike Missile Programme With One Hundred Ninety Million Pound Investment
UK Senior NHS Doctors Vote for Further Strike Action Over Pay and Contract Disputes
BBC Leadership Resigns After Donald Trump Launches Ten Billion Dollar Defamation Lawsuit
UK Fiscal Watchdog Warns Andy Burnham Government Faces One Hundred Billion Pound Budget Challenge
The AI Invoice Shock: Layoffs Didn't Save Managers Money — They Cost Them More
Concern: Sexually Transmitted Bacterium Among Men Develops Antibiotic Resistance
Following Massive Investor Demand: SK Hynix Raises 26.5 Billion Dollars on Nasdaq
Passenger Partially Pulled Out of Ryanair Jet After Cabin Window Fails Mid-Flight
After Four Years, and Under a Heavy Veil of Secrecy: King Charles Meets His Grandchildren, Harry and Meghan's Children
Cross-Party MPs Call for National Climate Emergency Broadcast
Bayeux Tapestry Arrives in the United Kingdom for Landmark Exhibition
United Kingdom Launches Modern Slavery Prevention Programme in Vietnam
Police Warn Against Misinformation Following Disorder in Glasgow
Pension Reform Takes Effect to Consolidate Workplace Savings Industry
Treasury and Bank of England Monitor Economy as Energy Price Pressures Ease
Government Orders Treasury Reform of Disciplinary Procedures Following Civil Servant's Death
Ofcom to Require Major Technology Platforms to Block Scam Advertisements
Labour Apologizes Over Gaza Position in Bid to Rebuild Support
High Court Rules UK-France Asylum Agreement Protection Cuts Were Unlawful
Metropolitan Police Open Murder Investigation Into Death of Former MP Ann Widdecombe
University College London Report Proposes Replacing Council Tax and Stamp Duty With National Property Tax
Treasury Places Amazon, Google, Microsoft and Oracle Under New UK Financial System Oversight Rules
Severe Heatwave Drives Dangerous Ground-Level Ozone Pollution Across Two Thirds of European Union
Westminster in Freefall as Farage's By-Election Gamble Triggers Broader Systemic Crises
Institutional Fractures and Political Volatility Reshape Britain's Domestic Landscape
Deadly Fire, Health Emergencies and Political Upheaval Shape a Volatile Global News Cycle
UK Energy Strategy Focuses on Storage and Offshore Wind to Support Renewable Transition
Regional Governments Gain Greater Role in Britain’s Infrastructure and Economic Strategy
Britain Strengthens Technology Sovereignty Through Tougher Artificial Intelligence Competition Rules
UK Government Expands Artificial Intelligence Use Across Public Services Despite Privacy Debate
UK Universities Warn of Financial Pressure After Sharp Fall in International Student Enrolment
Welsh Government Completes Rail Nationalisation With One Point Five Billion Pound Modernisation Plan
Northern Ireland Records Export Growth as Companies Benefit From Dual UK and EU Market Access
Greater Manchester Launches Two Billion Pound Plan to Convert Empty Commercial Sites Into Housing
National Grid Connects Europe’s Largest Battery Storage Facility in Yorkshire
UK Defence Ministry Plans Royal Navy Autonomous Fleet Deployment to Indo-Pacific
Scotland Approves Europe’s Largest Floating Offshore Wind Project Near Aberdeen
Competition and Markets Authority Blocks Forty Billion Pound Technology Deal Over AI Security Concerns
×