Liz Truss’ lawyers have sent a cease and desist letter to Sir Keir Starmer over his claims she “crashed the economy”.
The letter says Sir Keir’s continued claim the former Conservative prime minister crashed the economy with the September 2022 mini budget is defamatory and will “likely continue to cause serious harm to her reputation”.
It focuses on the Labour leader’s claims made in June last year during the general election campaign, and says accusations she crashed the economy were made with the purpose of damaging public opinion of Ms Truss as she stood as a parliamentary candidate.
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Ms Truss, who stepped down as prime minister in under two months in charge, lost the South West Norfolk seat she had held since 2010 to Labour’s Terry Jermy in last year’s election.
The letter also says it is “false” to claim the mini budget crashed the economy and provides details of a definition of “crash of the economy” by Dr Andrew Lilico, an expert from right-wing thinktank the Institute of Economic Affairs and managing director of economic consultancy Europe Economics.
Market movement following the mini budget did not constitute a “crash”, the letter says, and accuses Sir Keir of displaying an “ignorance of basic economics” by doing so.
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Following the mini budget, which included £45bn of unfunded tax cuts, the UK government’s long-term borrowing costs rose sharply by 0.3 percentage points over a day.
The pound then fell to record lows against the dollar, and there was another sharp rise in the cost of long-term government borrowing by 0.5 percentage points after then chancellor Kwasi Kwarteng hinted there would be further tax cuts.
This led to rising mortgage rates, with hundreds of products withdrawn, and an impact on UK pension funds.
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Ms Truss’ lawyers blamed the interest rate changes on the Bank of England, “in particular by its poor handling of the liability-driven investment bonds (LDI) crisis, and its regulatory failures”.
It points out the Bank of England is independent of government and says: “Thus the relevant rate changes were not ’caused’ by our client.
“These facts were clear as early as May 2024, if not before.”
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The letter argues there was “no rise in unemployment…no sustained loss of wealth”, and no “enduring economic impacts”.
It says Ms Truss and the mini budget did not play “a significant causal role in the financial market volatility of September/October 2022” and said almost everything, in fiscal terms, had been announced before the mini budget.
The letter requests Sir Keir “immediately cease and desist” from repeating she crashed the economy on an “amicable basis”.
“This request is made in the context of the basic levels of civility which is due between senior politicians, and we trust that you will respond accordingly,” the letter says.
