Things can only get worse for Liz Truss

Usually, the market in political commentary overshoots. Every other week for Tony Blair was his “worst week ever”, as Alastair Campbell used to say. Gordon Brown was written off and then managed to claw back enough ground to deny the Conservatives a majority. Theresa May could do no wrong, and then she could do no right, but she stumbled on for another two years.

Some newspapers were looking forward to a decade of Boris Johnson in Downing Street until, rather abruptly, they weren’t. So when Liz Truss has the worst start as prime minister since Viscount Goderich in 1827, whose government collapsed after 144 days, it would be wise to avoid exaggeration. (Disraeli referred to Goderich as “a transient and embarrassed phantom”, according to the wonderful Gimson’s Prime Ministers.)

Yet any attempt to correct the overshooting market seems to confirm that, if anything, shares in Truss are still overpriced. Some of the opinion polls seem to have paused in their headlong rush to the record books, but what traders call the fundamentals are still against the prime minister.

The Office for Budget Responsibility, the independent body set up by George Osborne to keep governments honest, yesterday delivered its preliminary, private verdict on Kwasi Kwarteng’s emergency Budget. It is likely to have concluded that getting the national debt under control will require a change of policy, even if it won’t have said so in so many words. The U-turn on the top tax rate is not enough.

That is the unalterable fact of Truss’s predicament. She tried to be bold, but boldly destabilised the public finances rather than boldly telling Conservative Party members that borrowing for tax cuts was a bad idea actually and she was going to do less of it rather than more. She cannot now restore the government’s fiscal credibility without either cutting public spending or putting taxes up again. Parliament won’t vote for spending cuts, and raising taxes will only damage her reputation further.

Some of that damage will no doubt seem to Truss to be unfair. Mortgage rates were going to go up anyway, and only a small part of the increase can be attributed to the effect on market confidence of Kwarteng’s tax cuts. But she and he will be blamed for the whole thing.

The disaster has already strained their political partnership. One No 10 official told a journalist this week that it was “absurd to suggest that there is a breach between the prime minister and the chancellor”, which has been the standard line since at least 1988, except that the journalist hadn’t even asked the question.

The coming week will bring only further woe. The Commons sits on Tuesday, and the plotting among Conservative MPs will resume in earnest. The Bank of England has to announce by the end of the week that it will continue to prop up the gilts market, because its intervention to stop pension funds going bust expires on Friday.

Meanwhile, the No 10 machine is uselessly pumping out trivial policy plans. The plan to allow childminders to look after more children, the unsinkable flotsam from Truss’s time as a junior education minister 10 years ago, is back. The policy of giving parents a handout to spend as they please on childcare has been recycled from the Tory leadership campaign.

These are not going to make any difference to the prime minister’s chances of survival. Not even a breakthrough in the talks on the Northern Ireland protocol will help — although we should be grateful for Truss’s astute shift in tone, and for her appointment of Steve Baker, the leader of the European Research Group, as a Northern Ireland minister. His apology on behalf of the ERG seems to have unlocked a willingness on the part of the Irish government to accept Unionist concerns as legitimate.

At some point, assuming that Tory MPs don’t immediately change the rule that prevents an attempt to oust her for 12 months, things may start to get better for the prime minister. It may be that, if the world price of natural gas comes down, the economic pain will ease. But most people have only just started to feel the squeeze of inflation, energy bills and more expensive mortgages.

Things are likely to get worse before they get better, and even when they do eventually get better, Truss is unlikely to get the credit for it. The big question, therefore, is not so much whether Truss can ever recover, because I don’t think she can do so sufficiently to avoid losing the next election. The question is whether Tory MPs accept that they are going to lose, or whether they do something about it.

They are too divided and traumatised to do anything about it now — we will see that on Tuesday — but I don’t think Truss can survive for two years.