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The resignation move is something investors and market stakeholders were impressed about as shown in the current growth of the British Pound which has been on a freefall for the better part of the past few weeks.
Liz Truss may come down in the history of the United Kingdom as one of the Prime Ministers with the shortest stay in office as she announced her resignation today. Truss took over the reins of affairs from former UK Prime Minister Boris Johnson on September 6, two days before the death of Queen Elizabeth II.
With just 44 days in office, of which 10 out of which official duties were paused for 10 days following the death of the Queen, Truss has not enjoyed so much rest in office as her mini-budget policies and debt-funded tax cuts riled the markets in ways that made her lose the confidence of her fellow Conservative Party members.
“We set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit,” Liz Truss said while announcing the resignation at Downing Street. “I recognize though, 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 announce that I am resigning as leader of the Conservative Party.”
Prior to her resignation, Truss fired Kwasi Kwarteng as Finance Minister and replaced him with Jeremy Hunt. While Jeremy notably backpedaled on the economic policies that were announced by Kwarteng, the trust the market had in the UK Government was evidently lost, presenting an avenue for a more drastic move.
Some members of the Conservative Party were notably asking for the Prime Minister to step down. As reported by CNBC, as many as 17 MPs have sent written letters to Graham Brady, the Conservative politician who heads the 1920 Committee and is in charge of leadership votes and reshuffles. Just before the announcement of the resignation, the number of those against Truss through their Votes of No Confidence had climbed up to 100.
Stabilizing the Market with the Right Choice for UK Prime Minister’s Office
The resignation move had come off as something investors and the market stakeholders were impressed about as shown in the current growth of the British Pound which has been on a freefall for the better part of the past few weeks.
At the time of writing, the GBP is up by 0.41% to 1.1256 against the United States Dollar, showing a broader positive market sentiment.
With Truss out, there are plans on going to elect a new Prime Minister within the next week. The top contenders include Rishi Sunak, the former Chancellor of the Exchequer whom Liz Truss beat to take up the Prime Minister’s position, current Finance Minister Jeremy Hunt, and former PM, Boris Johnson has also been listed as a major contender.
In all, the UK will need to pick a more economically savvy leader in order to gain back the trust of the market.
“In just a few weeks fiscal policy has swung from being ultra loose, to less loose to outright tight,” said Paul Dales, chief U.K. economist at Capital Economics in a note. “This has increased the downside risks to our forecast that the economy will enter a recession involving a peak-to-trough fall in GDP of around 2%, although that itself means there is also a downside risk to our forecast that interest rates will rise to 5.00%.”