Liz Truss threatens to SUE Starmer for claiming she 'crashed' economy

Former prime minister Liz Truss has threatened Sir Keir Starmer with legal action for saying she 'crashed the economy' during her brief tenure in Downing Street.

Lawyers acting for the former Conservative leader have written a 'cease and desist' letter to the current occupant of No10 over comments he made during the election campaign.

They accuse him of making 'false and defamatory public statements' about her record in power while she was standing for re-election in South West Norfolk. 

Ms Truss was one of the leading Tories to lose their seat in the party's 2024 election mauling, losing to Labour after it overturned her 2019 majority of 26,195.

Her record-setting 49-day tenure in No10, and the economic fallout from it was a key feature of the election campaign for Labour - with few Tories willing to defend her.

The mini-Budget in September 2022 unveiled £45bilion of unfunded tax cuts, which set financial markets into a panic and mortgage rates soaring. Ms Truss was forced to quit within a fortnight of it taking place.

But in their letter to the PM, seen by MailOnline, her lawyers say: 'We disagree that any market movement during the relevant period referred to in your defamatory statements can be classified as a ''crash of the economy'' in any proper sense of the the meaning of those words.'

However,  Downing Street questioned whether former prime minister Liz Truss would also be writing to 'millions of people up and down' the country who shared Sir Keir 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.'

And former Tory minister Conor Burns also questioned her decision to take legal action, tweeting: 'I wonder if Liz Truss has thought of taking legal action against Liz Truss for the serious damage she has done to her reputation?'

Ms Truss has conceded her plan to quickly abolish the 45p top rate of tax went too far, but otherwise defended her failed bid to boost growth in her doomed 'mini-Budget'. 

The lawyers highlighted several occasions in which Sir Keir said she had crashed the economy, including a TV debate with Rishi Sunak on June 4. 

And in his last appeal to voters before the July 4 vote Sir Keir said voters faced a choice between Labour and 'a Tory party that crashed our economy, left public services in ruin, and now wants to give us Liz Truss 2.0 with more unfunded spending promises.'

Last year Ms Truss received an apology from the Cabinet Secretary after Government King's Speech documents written by civil servants described her mini-Budget as 'disastrous'.

And her lawyers asked that Sir Keir show the same 'spirit' in his response. 

'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, at a time when you 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.

Referring to the movements in gilts and exchange rates at that time, the letter says: 'Such rate movements cannot properly be described as a crash of the economy.

'To use such an expression is to display ignorance of basic economics and common usage of the term ''crash'' when referred to an economy.'

The lawyers also suggest that Sir Keir's repetition of the claims in the lead up to last year's general election 'gives rise to a strong inference' that they were intended to 'damage our client's reputation and/or for political purposes'.

It asks for the Prime Minister to 'immediately cease and desist' from repeating the claims.

At the Conservative Party conference in October, Ms Truss said it would be 'economic illiteracy' to suggest that tax rises from Labour – at that point anticipated in Rachel Reeves' upcoming first budget – were a result of her economic inheritance.

Rachel Reeves was last night warned that the spike in UK borrowing costs is worse than the crisis that ended Liz Truss's premiership.

The interest rate on 30-year gilts - the government's long-term financing vehicle - hit 5.36 per cent today, the highest level for 27 years. 

The surge heaps pressure on the Chancellor's spending plans, which were already seen as tight despite her huge Budget tax raid. 

Treasury official have been insisting that meeting the government's fiscal rules - including balancing the government's day-to-day spending budget by 2030 - is 'non-negotiable'.

However, her headroom looks to have been all-but wiped out, potentially leaving Ms Reeves choosing between spending cuts and more tax rises - even though she previously pledged that the latter will not happen. 

Although the rise has been slower than the response to the mini-Budget in 2022 - and rates have been surging around the globe - analysts sounded alarm that the picture is 'more dire' now and the mood on markets is 'darker'.