Liz Truss takes over as Britain’s Prime Minister, Johnson resigns

Liz Truss takes over as Britain's Prime Minister, Johnson resigns

Liz Truss took office as Britain’s Prime Minister on Tuesday, facing one of the most daunting challenges for a new leader in post-war history, spearheaded by rising energy costs, a looming recession and labor disputes.

Truss, the fourth Conservative Prime Minister in six years, flew to the royal family’s Scottish homeland to be asked by Queen Elizabeth to form a government.

She replaces Boris Johnson, who was ousted after three turbulent years in power. following her appointment as Prime Minister and First Lord of the Treasury,” Buckingham Palace said.

The 47-year-old former Foreign Secretary will later address the country from Downing Street before naming her government. Johnson urged the country and its war party to unite behind the new leader.

Truss inherits a sluggish economy with double-digit inflation, skyrocketing energy costs and the Bank of England warning of a long recession by the end of this year.

Workers across the economy have already gone on strike. £100 billion ($116 billion) in energy has rocked financial markets, prompting investors to sell off the pound and government bonds in recent weeks.

He also steps into the recent crisis to hit Britain with a weaker political hand than many of his predecessors.

Having held a place in the cabinet of senior ministers for eight years, she defeated rival Rishi Sunak in a vote of Conservative Party members by a tighter margin than expected, and more of the party’s lawmakers initially backed her rival.

Johnson, who tried to cling on to power in July despite ministers resigning en masse over a series of scandals, told reporters and politicians gathered in Downing Street early on Tuesday that the country must unite.

“This is it folks,” he said in his farewell speech. “What I say to my fellow Conservatives, it’s time for politics to be over, folks. It’s time for us all to get behind Liz Truss and her team and her programme.”

After speaking outside the famous black door, he left London to travel to northeast Scotland and tender his resignation to the 96-year-old queen before Truss followed him into Balmoral Castle.

FROM CRISIS TO CRISIS

Britain, under Conservative rule since 2010, has stumbled from crisis to crisis in recent years and there is now the prospect of a protracted energy emergency that could erode household savings and jeopardize the future of businesses that still burdened by COVID-era loans.

Household energy bills are expected to rise 80% in October, but a source familiar with the situation told Reuters that Truss bills could be frozen in a plan that could cost around £100 billion ($115.33 billion) to overcome the COVID-19 furlough program.

It’s unclear how Britain will pay for the support, but the national debt is likely to increase. The size of the package and the fact that the energy crisis could drag on for a number of years have unsettled investors.

The pound has underperformed most other major currencies against the US dollar recently. In August alone, sterling fell 4% against the dollar, marking the worst month for 20-year UK government bonds since around 1978, records show Refinitiv and the Bank of England.

UK public finances continue to be weighed down by a massive government spending spree caused by the coronavirus. National debt as a percentage of economic output is not far from 100%, compared to 80% before the pandemic.

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