The 49-Day Collapse
Liz Truss entered No. 10 on 6 September 2022 with a clear policy agenda: aggressive tax cuts, a deregulation drive, and a rejection of what she termed "cautious Conservatism." By 25 September 2022, just 49 days later, she had resigned in disgrace—the shortest tenure of any British Prime Minister in history. The precipitating event was a catastrophic economic policy announcement that sent global markets into turmoil.
The Mini-Budget: £45 Billion of Unfunded Tax Cuts
On 23 September 2022, Chancellor Kwasi Kwarteng announced a mini-budget featuring £45 billion in tax cuts, unfunded by any spending reductions or revenue measures. The cuts included abolishing the top rate of income tax, reducing stamp duty, and removing caps on bankers' bonuses. The Office for Budget Responsibility (OBR) was instructed not to publish an economic forecast—a break with convention—and Kwarteng refused to wait for OBR analysis before announcing the package.
The Pound Crashes
Within hours of the mini-budget announcement, the pound collapsed. Sterling fell to $1.03 against the dollar—its lowest level since 1985—and continued falling. The currency slide reflected market verdict: unfunded tax cuts with no fiscal framework were economically irresponsible. Gilt yields spiked, mortgage providers withdrew fixed-rate offers, and household borrowing costs surged. First-time buyers faced a sudden tightening of lending availability.
Bank of England Emergency Intervention
The Bank of England was forced to launch an emergency bond-buying programme to stabilise gilts. Andrew Bailey, the Bank Governor, issued a rare public rebuke of government fiscal policy, warning of financial stability risks. This was extraordinary: the central bank acting as an emergency stabiliser of the government's own policy failure within days of announcement. The intervention cost taxpayers an estimated £30 billion.
Mortgage Rate Shock
Fixed-rate mortgages spiked. Lenders withdrew products, leaving millions unable to lock in rates. The typical cost of a £200,000 mortgage rose by over £200 per month within weeks. First-time buyers were locked out of the market. Existing homeowners faced catastrophic increases to their mortgage payments. This wasn't economic theory; it was direct household pain inflicted by policy chaos.
The Kwarteng U-Turn and Sacking
Facing a market mutiny and backbench Conservative rebellion, Kwarteng announced a partial U-turn on 3 October: corporation tax would not be cut. But the damage was already done. On 14 October, Truss sacked Kwarteng and replaced him with Jeremy Hunt. This was politically catastrophic—sacking your own Chancellor after two weeks looked like panicked capitulation rather than leadership. The replacement of Kwarteng, who had been promoted by Truss herself, signalled that Truss had no political control.
The Final U-Turn and Resignation
Hunt immediately walked back the entire Trussian agenda: the top rate tax cut was reversed, the stamp duty cut was reversed, the bankers' bonus cap reversal was reversed. Every marquee policy of Truss's premiership was abandoned within 11 days of her being installed. With the Prime Minister's entire economic agenda dismantled by her own Chancellor, and with Conservative MPs openly discussing a leadership challenge, Truss announced her resignation on 20 October. She served 49 days.
The Successor Context
Truss was succeeded by Rishi Sunak, who immediately announced spending cuts as Truss's successor. This meant that Truss's claim that her tax cuts were necessary for "growth, growth, growth" was revealed as false: Sunak's growth strategy involved fiscal tightening. Truss had promised liberation from austerity; her successor returned to it within weeks. The economic philosophy upon which her premiership rested was entirely discredited.