Liz Truss has reportedly sent the current Prime Minister a cease and desist letter warning him to stop saying she "crashed the economy".
In the election campaign, Labour leader Keir Starmer often said the 49-day former PM crashed the economy, referring to the unfunded tax cuts in the 2022 'mini budget' that sparked a massive sell-off of UK gilts, a run on sterling and forced an intervention from the Bank of England.
In the letter, Truss's lawyers said the remarks are likely to "cause serious harm to her reputation" and are "false and defamatory".
They also suggest that assertions contributed to Truss losing her seat as an MP.
"Gloriously hopeless"
Legal commentator David Allen Green said, if real, "it really is a glorious letter – almost too glorious to be true", and noted that the letter seemed to miss many important elements, including an explanation for the six-month delay in sending the letter.
It seemed to be based only on a complaint by Truss, Green said in a blog, as the 'crashing' of an economy "is inherently a matter of opinion".
He said there are many other problems with "hopeless" letter, including that it sets no deadline, no ultimatum, asks for no undertakings and does not set out what remedies will be sought if Starmer does not comply.
"It is a cease-and-desist letter that fails even to say what would happen if Starmer does not cease or desist. It is a weak litigation letter – about as weak a letter as could be sent in the circumstances."
Timing coincides with criticism for new govt
Starmer and his Chancellor, Rachel Reeves, have been facing fierce criticism from political opponents as well as bond and currency markets in recent days.
The pound on Thursday fell to its lowest in over a year and UK gilts saw multi-decade highs amid a sell-off that analysts and economists said was part of wider global shifts in government bonds plus specific worries about UK fiscal policy and rising inflation.
Government bonds have been selling off for many countries in recent days, but UK gilts have done so more than others, sending yields higher and putting pressure on stocks.
The 30-year gilt yield briefly hit 5.445% on Thursday, surpassing spikes following Truss's own Budget crisis period in 2022, and the highest since the late 1990s.
Analysts said investors were worried about extra borrowing needed by the UK government to achieve their spending plans, though the pound remained considerably stronger than when Truss ran the country.
UK problems and wider concerns
Citi currency strategists said the pound was under pressure amid a "combination of UK fiscal concerns and a broader sell-off in fixed income" that was driving government bond yields higher, but believe the risks of a Truss-like budget crisis are "low".
Panmure Liberum economist Simon French said the multi-decade highs in nominal and real gilt yields is mostly "being driven by events outside the UK’s direct control - in contrast to the mini-Budget of 2022 - with political events in the US causing an uncomfortable spillover effect."
However, he said criticism of the UK government’s enlargement of the state sector and re-emerging domestic inflation concerns are "amplifying fears surrounding this higher cost of borrowing".
"The risk is, having been seen to have u-turned on tax between the July Election and the October Budget, Chancellor Reeves faces a credibility problem with financial markets."