September 30, 2022

Liz Truss vows tax cuts after winning vote to be Britain's next prime minister

Liz Truss vows tax cuts after winning vote to be Britain’s next prime minister

  • Truss beats ex-Finance Minister Sunak to be new PM
  • Boris Johnson will officially step down on Tuesday
  • A new leader faces the cost of living and energy prices crisis

LONDON (Reuters) – Liz Truss will become Britain’s next prime minister after winning a leadership race for the ruling Conservative Party on Monday, pledging to press ahead with promised tax cuts and measures to tackle an energy crisis and a spiraling cost of living.

After weeks of an often poor and divisive leadership contest, Truss, the current and favorite to win, defeated former Finance Minister Rishi Sunak in a vote of Conservative Party members, winning 81,326 votes to 60,399.

“I will present a bold plan to cut taxes and grow our economy,” Truss said after the result was announced. “I’m going to tackle the energy crisis, I’m going to deal with people’s energy bills, but I’m also going to deal with the long-term issues we have on energy supply.” Read more

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Truss is taking over as the country grapples with a household financial crisis, industrial turmoil, recession and war in Europe, with Britain being Ukraine’s main backer. She seemed to rule out another national election before 2024, when she promised a major victory for her party.

But in a sign of deep divisions in her party, her winning margin was much narrower than expected and the narrowest of any Conservative leadership election held this century. Truss also won the support of less than 50% of members, with nearly one in five not voting.

“We are now united behind the new Prime Minister, Liz Truss, and she is leading the country through difficult times,” Sunak said on Twitter.

Truss will succeed Boris Johnson, who was forced to resign in July after months of scandals that saw support for his administration dwindle and ministers quit to force him to step down.

Johnson will travel to Scotland to meet Queen Elizabeth on Tuesday to formally tender his resignation. Trus will follow him and the king will ask him to form a government.

“I know she has the right plan to tackle the cost of living crisis, unite our party, and continue the great work of uniting and leveling our country,” Johnson said on Twitter. “Now is the time for all governors to support it 100 percent.”

Truss, long the favorite to replace him, will become the fourth Conservative prime minister since the 2015 election. Since then, Britain has stumbled from crisis to crisis, and is now seen facing a prolonged recession and double-digit inflation in July.

Within minutes of her victory, business leaders from the hospitality sector to manufacturing and the chemical industries called for help with soaring energy costs and tight labor markets to prevent companies from going bankrupt.

Truss, 47, promised to move quickly, saying within a week she would come up with a plan to tackle rising energy bills and secure future fuel supplies.

She indicated during her election campaign that she would defy tradition by scrapping tax increases and cutting other fees, in a move some economists say will raise inflation.

That, and a pledge to review the Bank of England’s transfers while protecting its independence, has prompted some investors to dump the pound and government bonds.

financially responsible

Kwasi Quarting, who is widely likely to be her finance minister, sought to calm markets on Monday, saying in a Financial Times article that while there will be “some degree of fiscal easing” under Truss, her administration will act “in a fiscally responsible manner”. Read more

When asked if he would become finance minister, Courting told Reuters he did not know.

Truss faces a long, expensive and difficult to-do list, which opposition parties say reflects 12 years of a weak Conservative government. Several of them called for early elections – something Truss rejected.

Veteran Conservative MP David Davis called the challenges “probably the second most difficult briefing for post-war prime ministers” after Conservative Margaret Thatcher in 1979.

Truss said she would appoint a strong government, dispensing with what a source close to her described as a “presidential style” of governance, and would need to win over some conservative lawmakers who have backed Sunak.

“It was closer than expected,” said Conservative MP Andrew Bridgen. “By the end of the week we will form a new government and you will be amazed at how this party can come together and unite.”

weak starting point

However, the Institute for Governmental Studies said Truss would have a weaker starting point than any of her predecessors, as she was not the first choice among her party’s lawmakers.

First on its list will be rising energy prices, expected to raise average annual household utility bills by 80% in October to £3,549 and £6000 in 2023.

Britain has fallen behind other major European countries in supporting its consumers, which the opposition blames on a “zombie” government incapable of acting during the Conservative Party leadership contest. Read more

“We heard more from the last prime minister about cuts in corporate tax over the summer than about the cost of living crisis,” said opposition Labor leader Keir Starmer.

Freezing bills at current levels is one option that is now being examined. Read more

While Truss mourned how Johnson defied Russian President Vladimir Putin and was admired in Ukraine, the Kremlin warned that the fraying relations between the two countries could worsen. Read more

(1 dollar = 1.0049 euros)

(dollar = 0.8715 pounds)

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(Additional reporting by Kate Holton, William James, Alistair Smoot, Sachin Ravikumar, Andrew McCaskill, Michael Holden, Farouk Suleiman and Movija M. Editing by Frances Kerry, Emilia Sithole Mataris, Angus McSwan, Frank Jack Daniel and Thomas Janowski

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