Truss and the curse of Brexit
Liz Truss is already the person who has lasted the shortest time at 10 Downing Street: 45 days. The financial markets and especially the pound did not want to give her any more time, and in the end they killed off the 47-year-old Prime Minister despite all her political merits.
The UK's situation fits neatly into the spectrum of political instability that has the European continent gripped by grief. The island nation has had four heads of government in six years and will end up resembling Italy the way it is going.
This year has been particularly stark, with the Tories themselves ousting their fellow Tory leader from power, the chatty Boris Johnson, whose scandals and lies eventually fed up with his own party, to the disenchantment of the public.
The arrival of Truss has not served to calm tempers. The pound in particular has seen its worst days during her very short government and is so weak that it is at 50-year lows. A pound exchanges at 1.13 to a dollar and 1.15 to a euro.
Stock markets have been a little more condescending, so while Truss had an emergency meeting with Graham Brady, chairman of the 1922 Parliamentary Committee, the London Stock Exchange fell slightly. It then remained flat after the announcement of her resignation.
What is happening in the UK that has lost the best glitter of its best days? I would say it is called the curse of Brexit, indeed the European Union (EU) should open its arms for it to return to its ranks, I am sure that if they were to hold a referendum today to ask the British people if they would like to reverse Brexit, a majority would say yes.
And they would do so because they have been victims of their own hubris and selfishness. Now they will surely miss the flow of Next Generation funds that the EU-27 will get to bail out their respective economies in the midst of the worst of the gales with a double economic crisis in three years and a commodity shock. They would come back begging to get in so as not to suffer the bureaucracy they are suffering in their imports and exports, the outflow of labour, of professionals; not finding the shelves as well stocked with cheap and fresh goods as before.
The UK is paying for its troubles and the British are devastated because they were promised that by leaving the EU their days would be sunny under the horizon of enviable stability and growth. All they have is a recession around the corner and they are completely on their own to deal with it. In the end they will end up being what Mario Vargas Llosa wrote "a small country".
All economic forecasts point to the British economy heading towards a recession that could last a year - expected in 2023 -, as the current progress of each economic quarter is revealing the slowdown in GDP.
The situation is very particular in the British economy because it is experiencing a series of affectations in its production and supply chain, partly altered by Brexit, the natural flow of goods and services that it obtained under the umbrella of the EU is a jumble of paperwork, bureaucracy and wasted time.
Added to this anomaly is the disruption to supply chains from the effects of the pandemic and then the collateral damage caused by Russia's invasion of Ukraine and the cascade of sanctions against the Russians and Belarusians. The damage of a war economy.
Bloomberg Economics forecasts that, in the fourth quarter of this year, British GDP will fall by 1% and markets are nervous because they see a rapidly worsening scenario.
The economic is spilling over into the political because the social pressure is being felt and will be immense. Truss was not seen as having the strength to lead the Titanic, the reality is that the Conservative Party has to choose wisely because it has already had four fiascos. If not, the general election is just around the corner and Labour looks a long shot.