Liz Truss, the British Prime Minister, has announced her resignation as head of the Conservative Party after her policies caused economic chaos and internal divisions within the party. Truss resigned from her PM post on October 20. Let’s see everything about her resignation and what happens next in detail.
Why did Liz Truss resign from her post?
After less than two months in office, British Prime Minister Liz Truss gave a speech outside Downing Street in which she announced her resignation. On Thursday, Truss said she could not keep the commitments she made while competing for Conservative leader because she had lost the confidence of her party.
Liz Truss said,
I am unable to carry out the Conservative Party’s mandate for me. I have therefore spoken to His Majesty the King to notify him that I am resigning as leader of the Conservative Party.
Truss, who has only been prime minister for 45 days, declared that she will continue in those roles until a replacement was chosen.
I recognise however that, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.
I have therefore spoken to His Majesty The King to notify him that I am resigning as Leader of the Conservative Party.
— Liz Truss (@trussliz) October 20, 2022
Graham Brady, the head of the 1922 Committee for the Conservative Party, stated that the winner of the leadership campaign should be announced by October 28. General elections were called for immediately by the opposition Labour party.
As a result of the financial market turmoil brought on by her economic policies, Truss had the least approval rating of any British leader in decades. As the leader with the shortest tenure in the nation’s history, Prime Minister Liz Truss announced her resignation, prompting a search for her successor.
Who is Liz Truss?
Mary Elizabeth Truss is a 47-year-old British politician who has served as the prime minister of the United Kingdom since 6 September 2022. She resigned from her PM post and also declared her intention to step down as Conservative Party leader. She had previously served in a number of Cabinet positions. Since 2010, Truss has been the South West Norfolk district’s Member of Parliament (MP).
Lizz Truss was the leader of the Oxford University Liberal Democrats and a student at Oxford’s Merton College. She joined the Conservative Party in 1996. She was chosen as the MP for South West Norfolk in the 2010 general election after two failed attempts to secure a seat in the House of Commons.
What is the reason behind her big decision?
Lizz Truss decided to resign after a serious economic and political crisis. Her tumultuous six weeks in power, during which her support rating dropped to the lowest of any British prime leader in decades as the markets reacted negatively to her proposal to cut taxes while increasing expenditure. This caused a serious economic crisis in the UK.
Some of the main reasons for the economical crisis are:
- In order to stop a rapid sell-off in the 2.1 trillion pounds, $2.3 trillion market for British government bonds that threatened to ruin the pension industry and raise the likelihood of a recession, the Bank of England was compelled to buy emergency bonds.
- The mini-Budget alarmed market investors because it suggested that the government might not be able to pay off the debts it accrued because of a large increase in debts at a time when the UK’s economic prospects have been at least uncertain.
- Investors began selling all attainable UK assets in a fit of fear. As a result, the pound sank to historic lows versus the dollar, aggravating the imported inflation by raising the price of imports. Similarly, investors began dumping govt bonds because they were unable to lend funds to the UK government.
- Many pension fund managers had taken precautions against interest rates rising quickly. However, the rapid spike in gilt yields meant that they were on the losing side of the wager; to make matters worse, the value of their assets, the gilts, was declining. This caused widespread fear and real concerns about the future of pension funds.
- Due to a dramatic increase in market interest rates, people who had loans were forced to refinance or risk losing their homes; potential homeowners quickly discovered that a new loan was much more expensive. And all of this occurred as millions of people in the UK struggle with the crisis brought on by rising costs of living and worry about how they will stay warm this winter as a result of high energy prices.
- After a severe selloff of UK debt in response to the plan, the Bank of England intervened to bring the financial markets back under control. Along with this, her office saw the death and state funeral of Elizabeth II.
Which economic strategies did Ms. Truss attempt to implement?
On September 6, Lizz Truss took office as prime minister after winning the support of her party’s members in a leadership contest over Rishi Sunak, Boris Johnson’s chancellor of the exchequer, whose resignation eventually toppled the previous.
Ms. Truss intended to borrow money to help customers with their energy prices while also lowering taxes to promote economic growth. The independent fiscal monitor of the government did not approve the plans.
There will be a leadership election to be completed in the next week.
This will ensure we remain on a path to deliver our fiscal plans and maintain our country’s economic stability and national security.
I will remain as Prime Minister until a successor has been chosen.
— Liz Truss (@trussliz) October 20, 2022
Why did her economic proposals cause a stir?
At a period of skyrocketing inflation, she and her then-Chancellor Kwasi Kwarteng suggested tax cuts, one of which was targeted at the wealthiest earners in the United Kingdom.
Liz Truss claimed she was unable to carry out the Conservative Party’s mandate for her election. However, the tax cuts’ lack of funding alarmed the markets, sending the pound down against the dollar, rising bond yields, and forcing the Bank of England to step in. When Mr. Kwarteng left his position as Treasury secretary, Jeremy Hunt reversed nearly all of the tax-cutting measures.
There has been public outrage over the Truss government’s economic policies, which included dramatic tax cuts followed by a swift U-turn and rollback.
What happens next for the UK, and who becomes Prime Minister?
After David Cameron, Theresa May, and Boris Johnson, Truss is the fourth Conservative prime minister to leave the office early.
The opposition Labour Party’s leader, Keir Starmer, declared,
“The Conservative Party has proved it no longer has the mandate to govern. The Tories cannot respond to their latest shambles by yet again simply clicking their fingers and shuffling the people at the top without the consent of the British people. We need a general election – now. After 12 years of Tory failure, the British people deserve so much better than this revolving door of chaos.”
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