Is Liz Truss being prematurely written off?

Liz Truss - Political Gambler

This article first appeared at on 6th September 2022

Liz Truss | The Political Gambler

Never before has a new Prime Minister faced such a challenging in-tray. Britain’s economic forecasts, even compared to struggling rivals, are grim. A winter of discontent looms large. The events of 2022 have slaughtered the Tory brand and the party is deeply divided following the removal of Boris Johnson.

Much of the commentariat, including plenty who were once on the side of any Tory, deride her policies and obsession with image. The polls are dire, implying Truss was a worse choice than Rishi Sunak. The betting signals are grim, too. The odds in our new Liz Truss Exit Date market imply she has around a 30% chance of still being in office come 2025.

So, should bettors buy into this narrative and back an early exit? Or could this be another opportunity to take a contrarian position, because the market is too stuck in the moment, not factoring in the potential for fortunes to change?

When I first put up Liz Truss for PM 15 months ago, she was a [32.0] chance, whereas Rishi Sunak and Keir Starmer took out around 45% of the book. The key to successful betting on politics is thinking ahead, trying to forecast the trajectory of events and their effect.

During the leadership contest, I couldn’t have been more scathing about Truss’ chances among the wider electorate. I stand by the argument that she was an inferior pick to Sunak or Penny Mordaunt but, on reflection, that may have been prematurely dismissive.

Will there be a honeymoon?

It is standard procedure for the British public to give incoming Prime Ministers a honeymoon. Boris Johnson almost doubled the Tory share in opinion polls when assuming power in 2019, and won a big majority before the year was out. In Theresa May’s early days, the Tories hit new highs in the polls, around 50%. When Gordon Brown replaced Tony Blair in 2007, he swiftly turned a deficit into a big lead.

Current polls do not point to a repeat for Truss, which must be a worry, but that may well be a reaction to the leadership contest and government inaction on the cost of living crisis. It is heavily briefed that Truss will freeze energy prices for consumers and businesses until the next election. That could be transformative.

What ultimately happened is that – irrespective of the reality or how ultra-engaged politicos perceived the government’s performance – the Conservative Party were rewarded by voters.

Remember Covid and the vaccine bounce

There was a ‘vaccine bounce‘. That providing a vaccine was a basic function of government, replicated by all our neighbours, was irrelevant. The public were grateful for the furlough scheme and for what they perceived as politicians taking their fears seriously, delivering responsible messaging every day. Indeed, around the world, incumbents prospered in the short-term from Covid.

Assuming the energy price freeze materialises, Truss may very well get a similar boost from relieved consumers and business owners. It may define her and provide a bank of goodwill, as the furlough scheme and vaccine did with Sunak and Johnson for some time. That bank would be hers to squander. I very much doubt she will make the same mistakes they did.

Labour’s lead is soft

Also, do not overestimate Labour’s position. Their poll lead was not hard-won. It was handed to them by Johnson’s corruption, shambolic government and constant lying. Labour are merely in a similar mid-term position as they were in 2013, or 1990. In those scenarios, Ed Miliband and Neil Kinnock went on to lose the next election. Keir Starmer is yet to prove he is a winner, and has not sealed the deal with the electorate.

In order to win most seats at the next election, they need to gain at least 70 seats from the Conservatives. That is a tall order for any opposition party, let alone to achieve the 124 seats required for an overall majority. Those tasks will be made harder by boundary changes.

Liz Truss | The Political Gambler

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