Odd Lots Podcast Summary
Episode: Liz Truss on the 'Doom Loop' Engulfing the UK Economy
Hosts: Joe Weisenthal & Tracy Alloway (Bloomberg)
Guest: Liz Truss, former UK Prime Minister, author of "10 Years to Save the West"
Original Air Date: August 28, 2025
Episode Overview
This episode explores fiscal pressures, central bank independence, and the so-called "doom loop" afflicting the UK economy, with former Prime Minister Liz Truss as the guest. The episode uses Truss’s brief 2022 premiership and the aftermath of her "mini-budget" as a lens to discuss broader issues of economic orthodoxy, the power of institutions vs. politicians, and the ongoing struggle for economic growth in major democracies. Truss voices strong criticisms of the UK’s economic and political structures, arguing that unelected bodies usurp the authority of democratically elected officials, leading to policies she contends are stifling growth and pushing the country closer to crisis.
Key Discussion Points & Insights
1. State of the UK Economy and Government Debt
- Recent UK government bond (gilt) yields have hit highs not seen since 1989, reflecting enormous fiscal and inflationary pressures ([02:22]).
- The UK, Truss argues, faces a 'doom loop' of high taxes, low growth, growing debt, and increasing political deadlock ([03:42]).
- Truss: “We are 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.” ([03:42])
2. Legacy and Lessons from the "Mini-Budget" Crisis
- Truss maintains she felt vindicated by subsequent economic stress, suggesting critics were unfair; "I could see our economy was stagnant… and we needed to do something different in order to get out of a negative spiral" ([03:42]).
- Asserts that her mini-budget didn’t actually introduce wild tax cuts, but rather "reversed a tax rise" by keeping the corporation tax lower ([08:29]).
- Claims that opposition from both institutional actors (Bank of England, Office of Budget Responsibility) and her own party, not markets alone, forced her reversal: "It was politically not possible" to implement some spending cuts ([08:29]).
3. Central Bank Independence as Structural Constraint
- Truss fiercely criticizes the Bank of England’s independence, calling for greater political accountability ([15:51]).
- She connects this to a global problem: "There is a reckoning coming for the central banks, not just in Britain, but also in the United States, also the ECB. The current system does not work." ([15:51])
- She positions herself with Donald Trump’s criticisms of the Fed and institutional barriers to economic change.
4. Institutional Power vs. Democratic Mandate
- Truss is adamant that “democratically elected politicians should decide policy, not unelected central banks,” arguing that technocratic elites hold too much sway ([13:49]).
- States that UK politicians are hemmed in by an “economic establishment” and international networks (IMF, World Bank, central banks) that dictate orthodoxy.
5. Political Realities: Parliamentary Obstacles to Reform
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Even with a majority, her attempt to peg welfare rises to wages (not prices) – a "modest" restraint – met strong Tory opposition ([08:29]).
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Truss and the hosts note that real spending cuts only tend to come following a crisis (referencing Greece, Ireland, Argentina) ([20:26]).
“All of the evidence… is that spending cut programs have been achieved, have come after a crisis. I think that's deeply regrettable, but I can't see… serious spending cuts happening until Britain runs out of money.” – Liz Truss ([20:26])
6. Supply-Side and Growth-Focused Agenda
- Calls for "abolishing planning regulations, taking on the environmental NGOs, getting on with fracking, using North Sea oil, maybe using our coal reserves" as the politically feasible way to grow the economy ([21:39]).
- Believes raising taxes further is counterproductive: "Raising taxes has proved already to be counterproductive. Doing it even more will simply make the UK even more unattractive for investors." ([21:39])
7. Cultural and Institutional Barriers: “The Cult of the NHS”
- Joe questions if there’s a “cult of the NHS”; Truss acknowledges it but says public skepticism is growing due to poor outcomes ([23:17]).
- Argues UK health outcomes lag similar economies, suggesting the system is overdue for reform.
8. Why Keynesianism? Institutional Capture and Media Critique
- Truss ascribes the persistence of Keynesian economic orthodoxy to "institutional capture" by the left, including universities, bureaucracy, and media ([24:36]).
- Criticizes British economic journalism as "appalling" and too focused on click-driven content ([52:19]).
9. Consensus, Bureaucracy, and Future of UK Parties
- Argues both main parties share a flawed economic consensus: “No one is saying… that the institutions need to change” – only a fundamental shake-up will deliver real change ([29:53]).
- Says bureaucracy wields real power: “If the bureaucracy isn’t changed, if there isn’t fundamental change to the way Britain is run, nothing will alter.” ([27:49])
10. Free Speech, Law, and “Two-Tier Britain”
- Truss decries what she sees as a clampdown on free speech, referencing high-profile cases and advocating for a “Great Restoration Bill” to restore liberties ([34:06]).
- Argues dangerous and disproportionate penalties for offensive speech online, contrasting them with leniency for “serious” crimes ([33:08]).
11. Growth Forecasts and the OBR
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Truss accuses the Office of Budget Responsibility (OBR) of entrenched pessimism, systematically “overestimating” the revenue from tax increases and “underestimating” the impact of supply-side reform ([54:13]).
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Advocates for a model where politicians pick economists who share their vision; decries dependence on long-term forecasts given economic uncertainty.
“I think we’re far too reliant on forecasts. You can’t predict the future… My economics is based on first principles.” ([54:13])
Notable Quotes & Memorable Moments
On Political Constraints and Reform
- "There were people out there who want you to fail, not just your political opponents, but also the institutional opponents." – Liz Truss ([05:15])
- "We are heading for a very, very serious crisis. I said last year I thought we were headed for an IMF bailout… I think that’s even truer now than it was a year ago." – Liz Truss ([03:42])
- "All of the evidence… is that spending cut programs have been achieved, have come after a crisis… I can't see… serious spending cuts happening until Britain runs out of money." – Liz Truss ([20:26])
On Central Banks and Democracy
- "I just think it’s wrong that people should be making those decisions and not accountable to the electorate." – Liz Truss ([15:51])
- "There is a reckoning coming for the central banks… The current system does not work." – Liz Truss ([15:51])
On the Media
- "I think the British press’s coverage of economics is appalling. I think their coverage of politics is skin-deep… There used to be a golden age… I’m afraid they don’t care about the truth now." – Liz Truss ([52:19])
On Growth and Fiscal Policy
- "Raising taxes has proved already to be counterproductive. Doing it even more will simply make the UK even more unattractive for investors." – Liz Truss ([21:39])
- "It is the only strategy." [regarding chasing growth to outpace government spending] ([54:02])
On the Conservative Party and Institutional Change
- "The Conservative Party lost its soul… The big mistake the Conservative Party made was not reversing [institutional changes]. … These were not the Conservative Party's policies. They were just policies that we didn't object to.” – Liz Truss ([36:31])
Key Timestamps & Topics
- [03:42] – Truss’s sense of vindication & fears of an IMF-style bailout for the UK
- [08:29] – Why the "mini-budget" failed; institutional opposition & party politics
- [13:49] – Question of central bank independence; calls for greater political control
- [15:51] – Comparison to US & ECB, critique of global technocratic order
- [20:26] – Truss: Real reform only happens after crisis; Greek & Irish examples
- [21:39] – Supply-side priorities; limits of further tax hikes
- [23:17] – UK’s “cult of the NHS,” public skepticism
- [24:36] – Why Keynesian economics still dominates (“institutional capture”)
- [27:49] – Bureaucracy vs. party politics: Who holds real power in the UK
- [33:08] – Free speech, policing of expression, and two-tier justice
- [34:06] – Proposed legislative remedies for free speech
- [36:31] – Conservative Party's failure to reverse Blair-era reforms
- [52:19] – Truss’s harsh appraisal of British media
- [54:13] – Critiques of economic forecasting and the OBR
Conclusion
The episode paints a picture of a UK mired in institutional inertia and fiscal crisis, with democratic choice—via politicians—constrained by unelected expert bodies. Liz Truss forcefully argues for a fundamental overhaul of how the UK governs its economic and social policy. She regards both established parties as captured by failed orthodoxy and bureaucratic interests. Along the way, the discussion exposes the challenges of implementing change in democracies facing both economic and cultural sclerosis, revealing why the UK’s 'doom loop' is, in her view, so difficult to break.
For listeners interested in debates over central banking, bureaucracy vs. democracy, economic orthodoxy, and the limits of political power, this episode offers a candid and combative account of recent UK history and its broader implications for major economies worldwide.