Liz Truss becomes UK prime minister

Truss enters office facing an energy crisis and the worst fall in living standards in over a century in the UK

05 September 2022

Following what seems like an interminably long contest, the position of prime minister of the United Kingdom of Great Britain and Northern Ireland has unsurprisingly fallen into the hands of Liz Truss, anointed by approximately 141,000 Conservative party members. The next few days will see much analysis of her proposals aimed at tackling the energy crisis in the UK and, as one senior Tory admitted, the only way the Conservative party will remain in power is if they “get energy right”. Freezing the energy cap is the most obvious policy path to take and her much touted tax cuts might bring some relief to consumers, but it is still likely to fall short of re-powering the economy into overnight growth. The current cost of living crisis is historic – the worst fall in living standards in over a century but equally so, the public debt position is at levels that were once deemed unaffordable so a spending splurge will not be viewed favourably by the markets.

The Conservatives have been in power for 12 years and have shown little progress in productivity growth and the UK has slipped down to the sixth largest economy, with India recently overtaking the UK in the global rankings. Already known for some quite major U-turns in core beliefs, Truss might end up being just another exemplar of the now curious short-lived Tory party leaders, unable to corral a party which is split into multiple factions. The clock is ticking and sterling will likely be under pressure if Truss fails to deliver a competent and believable vision for the UK economy.