London Daily

Focus on the big picture.
Monday, Jul 20, 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
EU Imposes Record €550 Million Digital Services Fine on AliExpress
London’s Housing Starts Collapse as Planning and Building Costs Stall Development
Charlie Sheen’s Daughter: "My Dad Didn’t Buy Me a House, My Breasts Bought It"
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Naturally Conceived Identical Quadruplets Born in Rare Brisbane Delivery
Tate Brothers Fight British Extradition Bid After Miami Arrests
Burnham Reshapes Britain’s Government Around Living Costs, Devolution and Security
Jingye Demands Full Compensation After Britain illegally Nationalized British Steel
Just Another Liar or a Robin Hood? Andy Burnham Pledges Cost-of-Living Help in First Speech as UK Prime Minister
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Police Block Cockroach Janta Party’s March to Parliament as Education Protests Intensify
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Turkey Explores S-400 Transfer to UAE in Bid to Rejoin F-35 Program
Josh Kerr Breaks Twenty-Seven-Year World Mile Record at London Diamond League
Thames Water Crisis Deepens as South East Water Outages Hit Thousands in Kent
EU Ban on Destroying Unsold Clothing Forces British Fashion Brands to Change Operations
UK Government Confirms Existing North Sea Oil and Gas Licences Will Be Honoured
UK Covid Inquiry Finds Nearly Ten Billion Pounds Lost in Pandemic Protective Equipment Procurement
Thames Water Moves Toward Possible Temporary Nationalisation Amid Rescue Plan Dispute
Andy Burnham Cancels One Point Eight Billion Pound Digital ID Programme After Taking Office
UK Government Takes British Steel Into Full Public Ownership to Protect Jobs and Supply Chains
Andy Burnham Becomes UK Prime Minister and Pledges Focus on Living Costs and Public Services
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Singapore Considers Lower Taxes for Fund Managers as Hong Kong Intensifies Talent Contest
US Retaliates Against Iran After Two American Troops Killed in Jordan
Bank of Asia BVI Enters Court-Supervised Liquidation After Regulators Find It Insolvent
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Brothers Andrew and Tristan Tate Who Turned "Toxic Masculinity" Into a Brand Arrested in Miami as Britain Seeks Their Extradition
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
Gold and Cash Seizure Puts Indonesia’s Senior Anti-Corruption Prosecutor Under Investigation
The Ledger Will Not Trust on Faith
Bank of England Warns Climate Shocks Could Trigger Sudden Asset Repricing
UK Treasury Places Microsoft, Google, AWS and Oracle Under New Financial Resilience Rules
Scottish Government Faces Pressure Over Delays in Vulnerable Group Background Checks
Crown Prosecution Service Authorises Additional Charges Against Andrew and Tristan Tate
NHS Approves At-Home Cancer Treatments for Rare Blood Disorders
Bank of England Gains Oversight of Major Cloud Providers Supporting UK Financial System
UK Government Plans Major Overhaul of English Local Councils Through New Unitary Authorities
British Steel Nationalisation Dispute Escalates as Chinese Owner Jingye Seeks Compensation
×