Truss appointed as British Prime Minister, Johnson resigned

LONDON (Reuters) – Britain’s Queen Elizabeth appointed Liz Truss as Britain’s prime minister on Tuesday to guide the country through a looming recession and energy crisis that threatens the future of millions of families and businesses.

Truss, the fourth Conservative prime minister in six years, flew into the Scottish royal family’s home to ask the 96-year-old king to form a government. She replaces Boris Johnson, who was forced to resign after three turbulent years in power.

“The Queen has received in the audience the Right Honorable Elizabeth Truss, Member of Parliament, and asked her to form a new administration,” Buckingham Palace said in a statement.

Mrs. Truss accepted Her Majesty’s offer and kissed her hands on her appointment as Prime Minister and First Lord of the Treasury.

Truss will face one of the most troubling lists of problems for any leader in post-war Britain as inflation hit double digits, energy costs soared and the Bank of England warned of a prolonged recession by the end of this year.

Its plan to boost the economy through tax cuts with the potential to save around 100 billion pounds ($116 billion) to reduce energy costs has already rattled financial markets, prompting investors to dump the pound and government bonds in recent weeks.

It also intervened in the latest crisis to strike Britain with a political hand weaker than many of its predecessors after it defeated rival Rishi Sunak in a vote of Conservative Party members by a narrower margin than expected, and with more party MPs initially supporting her rival. .

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

“These are the people,” Johnson said in his farewell address. “What I’m saying to fellow conservatives is, it’s time for politics to end, guys. It’s time for all of us to support Liz Truss, her team, and her program.”

After speaking out the famous Black Door, he left London to travel to North East Scotland and tender his resignation to the Queen before Truss followed him to Balmoral Castle to be asked to replace him.

Johnson used his departure speech to brag about his successes, including an early vaccine program during the coronavirus pandemic and his early support for Ukraine in its fight against Russia.

He also listed “Brexit” as one of his main achievements, even though polls now show that a majority of people think leaving the EU was a mistake.

change the rules

Johnson’s speech was full of blasts and jokes that marked a man who was loved by much of the British public, but also hated by many. He has refused to show any remorse over the scandals that brought him down, including “Partygate,” a series of raucous rallies in Downing Street while the country was under a COVID-19 lockdown, for which police fined him.

Britain, under Conservative rule since 2010, has stumbled from crisis to crisis in recent years, and there is now the prospect of a prolonged energy emergency that could drain household savings and threaten the future of small businesses still weighing on the coronavirus. era loans.

Household energy bills are set to jump 80% in October, but a source familiar with the situation told Reuters that Truss could freeze bills in a scheme that could cost around £100 billion, bypassing his Covid-19 holiday plan.

It is not clear how Britain will pay for the support. According to the source, government-backed loans to energy suppliers are being considered, which are repaid either by fees on future bills or through general taxes.

But the size of the package, plus the fact that the energy crisis could last for a few years, frightened investors.

The Sterling has fared worse against the US Dollar than most of the other major currencies recently.

In August alone, sterling fell 4% against the dollar, and it was the worst month for 20-year British government bonds since around 1978, according to Refinitiv and Bank of England records.

Britain’s public finances are still affected by the huge government spending spree on the Corona virus. Public debt as a share of economic output is not far from 100%, up from about 80% before the pandemic.

(dollar = 0.8638 pounds)

Written by Kate Holton; Additional reporting by Michael Holden, Alistair Smoot, Andy Bruce, Paul Sandel and Movija M; Editing by Angus McSwan

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