UK's 1980s economic model strangled into stagnation, Liz Truss says

Liz Truss will accuse Western leaders meeting Chinese President Xi Jinping of displaying 'weakness'

Liz Truss will deliver the Margaret Thatcher Lecture for the right-wing think tank Heritage Foundation on Wednesday. AP

Liz Truss is expected to deliver a speech in the US on Wednesday to renew her advocacy of low taxes and question whether western nations are “match fit to take on China”.

Delivering the Margaret Thatcher Lecture for the right-wing think tank Heritage Foundation, she will suggest the 1980s “Anglo-American” economic model of increased privatisation and limited government is being “strangled into stagnation” in the latest leg of her comeback to the political limelight.

Britain's shortest-serving prime minister will urge the UK and the US to better promote “free markets” and “free speech” in the face of the “threat” from authoritarian regimes.

The Tory backbencher, whose tenure in Downing Street lasted only 49 days, beat Rishi Sunak in last summer’s Tory leadership contest running on a tax-cutting agenda before her disastrous economic plans sunk her premiership, handing him the keys to No 10.

“It was Anglo-American individualism that made the world prosperous … Low taxes, limited government and private enterprise were what won the Cold War. I worry that we are now seeing this model strangled into stagnation,” Ms Truss is expected to say.

“And we have to ask ourselves: are we still match fit to take on China and to take on the whole concept of state capitalism?”

“We’ve allowed our opponents to own our institutions, crowd our campuses and fill our airwaves,” she will add.

“Not long ago the United States and the United Kingdom were absolute bastions of free enterprise, free markets and free speech … But what we’ve seen now is self-flagellation — lashing out at the very things that made us great.”

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The speech will accuse Western leaders meeting Chinese President Xi Jinping of displaying “weakness”.

It comes days after French President Emmanuel Macron and European Commission President Ursula von der Leyen met the Chinese leader in a show of European unity in dealings with Beijing.

Ms Truss will also accuse a “cartel of complacency” of advocating for higher taxes as she takes aim at the Organisation for Economic Co-operation and Development global economic body.

“Putin and Xi have made it clear they are allies against Western capitalism. That is why Western leaders visiting President Xi to ask for his support in ending the war is a mistake. And it is a sign of weakness,” Ms Truss is expected to say.

She is due to urge conservatives around the globe to “mount a fightback for freedom” and “get real about the threat from authoritarian regimes and their unwitting allies in the anti-growth movement”.

“Not content with high taxes in their own countries, we now see governments seeking to agree high taxes around the free world.

“I’m talking about the OECD minimum tax agreement, which will stop countries lowering things like corporation tax and becoming more competitive,” she is expected to say.

The speech comes as the Prime Minister meets US President Joe Biden in Northern Ireland to mark the 25th anniversary of the Good Friday Agreement.

Ms Truss’s recent comments on China, described as “hawkish” by one ally, could stoke divisions within the Tory Party.

Many are more eager to hastily cut taxes than Mr Sunak and hold a more aggressive stance on China.

Ms Truss had been expected to officially re-designate China as a “threat” in official speak instead of a “systemic competitor” during her leadership, while Mr Sunak has described the nation as a “systemic challenge” rather than a threat.