Liz Truss on the 'Doom Loop' Engulfing the UK Economy
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What is the “doom loop” that’s currently affecting the UK economy?
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Hello and welcome to another episode of the Oddlots Podcast. I'm Joe Weisenthal.
And I'm Tracy Alloway.
Tracy, we're recording this August twenty sixth, two thousand twenty-five. There is a lot going on right now, particularly in I guess many big questions about macro and governance and all kinds of things in some of the richest countries in the world.
That is certainly one way to put it. So just overnight we had headlines saying that Trump was going to fire Lisa Cook from the Fed. And this obviously fits into the whole debate around central bank independence and how much influence governments should actually have on central banks. And it turns out this is a debate that we've had before in other countries.
Totally. And part of the reason I think Trump is focused on the Fed is the high level of interest payments and he'd like to see them come down. Speaking of interest payments, this morning I saw the headline that the UK thirty year guilt is like at the highest since nineteen eighty nine. It continues to elevate. So for all the stress that we have here, all the fiscal pressure, inflationary pressure, it actually seems potentially worse elsewhere.
Although
I will say the
pound is up against the dollar, right? So from a currency perspective, we're kind of doing worse.
From a currency uh perspective. But there's a lot. These things are global, is I think the point. And all of these anxieties and stresses, it's not just a US story.
No. And obviously it's feeding into bond markets. And I cannot tell you how many notes we get on a daily basis about how governments can reduce the debt, how they deal with deficits and things like that.
Right. Now, everyone's talking about this these days here in twenty twenty five. It got a lot of interest, of course, in twenty twenty-two, after there was a famous spike in yields in UK GILTS, and maybe this sort of premonition of what a lot of rich countries would be dealing with. So I'm very excited to say we really do have the perfect guest to speak about all of this today to understand some of the pressures facing rich developed economies. We're speaking with the Right Honorable Liz Truss, former Prime Minister of the UK, author of the recent book Ten Years to Save the West. Liz Truss, thank you so much for coming on Odlots. Thrilled to have you here.
Good to be on.
I have a question. You know, when you see like thirty year guilt yields higher substantially than when you were the prime minister and when everyone attacked you over the mini budget, do you feel some sense of like sort of vindication or happiness or is it all like despair for the state of your country?
Well, I do feel despair for the state of my country, and it's in fact why I tried to do what I tried to do in twenty twenty-two. Because I could see the way things were going. I could see our economy was stagnant, that the tax revenue being generated wasn't enough to cover the amount of money the state was spending. And We needed to do something different in order to get out of a negative spiral. And what I see now is we're further down that negative spiral and we are heading for a very, very serious crisis. I said last year I thought we were headed for an IMF bailout, as Britain experienced in the nineteen seventies. I think that's even truer now than it was a year ago. And we're in an economic doom loop.
of higher taxes, lower growth. higher debt and it's very difficult now to see the political way out of that.
So how should governments actually announce or unveil large-scale policy shifts?
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Chapters
8 chapters
1
What is the “doom loop” that’s currently affecting the UK economy?
0:01–8:07
2
How did Liz Truss describe the fiscal pressures that led to the 2022 mini‑budget?
8:07–17:27
3
Why does Truss say the UK is now facing an economic “doom loop” of higher taxes and lower growth?
17:27–24:21
4
What does Truss think is the proper way for governments to announce large‑scale policy shifts?
24:21–31:19
5
How does Truss view the role and independence of the Bank of England and other unelected bodies?
31:19–38:53
6
Why did Truss focus on keeping corporation tax low rather than raising it?
38:53–45:42
7
What supply‑side reforms does Truss propose to revive British manufacturing?
45:42–53:13
8
How does Truss envision reforming free‑speech and media regulation in the UK?
53:13–1:00:45
Speakers
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