Liz Truss threatens Keir Starmer with legal action over claims she ‘crashed the economy’

London: Liz Truss, whose record brief stint as prime minister saw the pound plunge and Britain’s borrowing costs rise, has issued a legal threat to Prime Minister Keir Starmer telling him to stop claiming she “crashed the economy”.

A cease and desist letter, sent on Wednesday by law firm Asserson, claims statements about her actions are “false and defamatory”. Truss’ legal team claims the Labour leader had caused “serious harm to her reputation” and even said such comments may have contributed to her losing her parliamentary seat in last year’s general election.

Former British prime minister Liz Truss.Credit: PA via AP

Truss was the UK’s shortest-serving PM, leaving Downing Street after just 49 days when borrowing costs soared after her government’s mini-budget that included £45 billion ($89.4 billion) of unfunded tax cuts. She resigned after 44 days in office, having almost reversed the entire budget.

“Our client requests that you immediately cease and desist from repeating the defamatory statements,” the letter states. “We sincerely hope that this matter can now be resolved and that you will refrain from causing any further damage to our client.”

Truss’ lawyers accused Starmer of making defamatory statements on three occasions in June last year when he said she “crashed the economy”, which they allege are “false and misleading” and “grossly defamatory and indefensible”.

British Prime Minister Sir Keir Starmer.Credit: Getty Images

The legal letter, first reported by the London Telegraph, argues the financial movements did not amount to an economic crash, since there was no fall in economic output or rise in unemployment – the usual signifiers of such an event. It states that the request “is made in the context of the basic levels of civility which is due between senior politicians”.

The threat came on the day Starmer’s economic credentials were exposed, as the pound plunged to a nine-month low, while the yield on 10-year gilts – a measure of the government’s borrowing costs – climbed to 4.8 per cent, its highest level since 2008.

Sterling fell 0.9 per cent against the US dollar to $1.226 and losses for the currency across the past three days had amounted to 2 per cent, the largest since February 2023. The pound recovered ground on the greenback in the afternoon.

Economists have warned these rising costs could force further tax rises or cuts in spending as the government tries to meet its self-imposed rule not to borrow to fund day-to-day spending. The weakness signals that investors are sceptical about the government’s growth ambitions and management of the public finances.

A Downing Street spokesman said Truss should also write to “millions of people up and down the country” who, he said, had seen their mortgage bills pushed up by her economic policies.

He said that Starmer “absolutely stands by” his language about the previous government’s record.

In a video later posted on X, Truss said Labour, the Bank of England and “the media establishment smeared my budget and forced a reversal”.

“Now, they’ve plunged the country into economic crisis,” she said.

The threat will likely expose Truss to further ridicule as a long-time campaigner for free speech. Last year, as a series of riots saw people jailed for public order offences, she said: “I am appalled by the attacks on free speech in Britain and Europe. We can’t be truly free without free speech.”

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