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The UK must avoid conflict with Europe and China


Liz Truss says she wants to take a tough line but any freedom to forge her own foreign policy is a casualty of the economic turmoil following her first budget.

The tax-cutting budget from new UK chancellor Kwasi Kwarteng was clearly not inhibited by any apparent concern for the markets’ response. But the interest rate rise it contributed to and the scepticism raining down on the Truss government should force a recognition that economic vulnerability now constrains what the UK tries to do abroad.

That would mean taking a more cautious approach than the new UK prime minister seems to want to adopt. The Treasury and the Foreign, Commonwealth and Development Office (FCDO) may sit next to each other in Whitehall’s parade of 18th century buildings, but a huge gulf lies between them.

When talking to officials, it is striking how those in one building make decisions without reference to the other. Foreign policy is made with no consideration of the UK’s need to borrow money in the markets, and budgets are written with little calculation of the effect of decisions next door – although the Cabinet Office does at least try to reconcile these.

But that approach is a luxury which the budget response and the sharp rise in national debt it will bring makes no longer affordable.

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