Liz Truss sends cease and desist letter to Keir Starmer over 'defamatory' claim she 'crashed the economy'

9 January 2025, 10:43 | Updated: 9 January 2025, 13:01

Liz Truss has demanded that Keir Starmer stop claiming that she "crashed the economy" with her 2022 mini-budget.

Lawyers for the Conservative former Prime Minister said the claim, often repeated by Labour ministers, is "false and defamatory" and was a factor in Ms Truss' failure to be re-elected as an MP last year.

Ms Truss and then-Chancellor Kwasi Kwarteng's autumn 2022 mini-budget, which combined tax cuts and plans to borrow more, caused turmoil in the financial markets.

The letter sent on behalf of Ms Truss claims that the mini-budget did not result in an economic crash because unemployment did not rise and economic output did not fall.

The lawyers cite arguments from right-leaning economist Andrew Lillico, a fellow with the think tank the Institute of Economic Affairs.

He said: "There wasn’t any crash in the economy. The economy actually grew faster in the period immediately following the mini-Budget."

In a video today, Liz Truss said she tried to fix the country’s economic problems back in 2022 but was “undermined by the economic establishment.”

She said Labour has borrowed ‘far more’ in her budget than the Tories did in 2022 but with ‘no plans’ for economic growth.

“I was smeared by the Labour Party and members of my own party for having crashed the economy.”

She said she faced an “onslaught” from the media and said her mini budget was “sabotaged.”

It comes with British government borrowing costs soaring amid a sell-off in the bond markets this week, leading to fears that the Chancellor may have to raise taxes again or cut public spending.

Several key figures have raised the alarm over the state of the British economy after Rachel Reeves' Budget in October.

The Bank of England warned that the Budget was hurting the economy, while a major survey by the Confederation of British Industry (CBI) from December found companies expected to reduce both output and hiring.

Labour have pointed towards the Tories' 14 years in government as they seek to deflect criticism for the state of the economy. During the election last year Starmer and other top Labour figures made frequent references to the mini-budget 'crashing the economy'.

Former Cabinet Secretary Gus O’Donnell tells Andrew Marr that the government ‘will have to get very tight on spending’.

Ms Truss' letter, seen by the Telegraph, reads: "We are writing in relation to statements you have made publicly in respect of our client which have caused and will likely continue to cause serious harm to her reputation.

“Of particular concern are the false and defamatory public statements you made about our client in the lead-up to the UK general election from late May 2024.

The lawyers said that Labour "knew or ought to have known that those statements were false and the statements were likely to materially impact public opinion of our client whilst she was standing as the parliamentary candidate for the Conservative Party in South West Norfolk."

They added that the statements are "defamatory" and causing continuing damage to our client’s reputation.

“Accordingly, our client requests that you immediately cease and desist from repeating the defamatory statements at any point, from causing them to be repeated or from otherwise re-publishing the defamatory statements or any part of them.

“We sincerely hope that this matter can now be resolved and that you will refrain from causing any further damage to our client.”

Downing Street spokesperson said if Truss would be writing to "millions of people up and down" the country who shared Starmer's view.

The Prime Minister's official spokesman said: "I am not sure I have seen the detail of the letter, but from what I can my gather, I don't think the Prime Minister is the only person in the country who shares the view in relation to the previous government's handling of the economy.

"I guess the question is whether she will be writing to millions of people up and down the country as well, who felt her economic record which pushed their mortgage bills up."