September 30, 2022

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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 officially steps 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 promises of tax cuts and tackle a growing energy crisis.

After weeks of an often poor and divisive leadership contest, Truss, the current foreign secretary, 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 will address the energy crisis, I will address people’s energy bills, but I will also address the long-term issues we have on energy supply.”

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Truss is taking over as the country grapples with a cost-of-living crisis, industrial turmoil, recession and war in Europe, with Britain being a major supporter of Ukraine. She appears to have ruled out another national election for the next two years, saying she will win a big victory for her party in 2024.

She succeeded Boris Johnson, who was forced to announce his resignation in July after months of scandal that eroded support for his administration.

He 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.

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Truss, who has long been the front-runner to replace him, will become the fourth Conservative prime minister since the 2015 election. During that time, the country has struggled from one crisis to the next, and is now facing what is expected to be a prolonged recession caused by a high inflation rate of 10.1%. in July.

Truss, Johnson’s 47-year-old foreign secretary, promised to act quickly to tackle the cost-of-living crisis, saying she would draw up a plan within a week 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, a move some economists say will fuel inflation.

This, combined with 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.

Kwasi Karting, who is widely likely to be her finance minister, sought to calm markets on Monday, saying in an article in the Financial Times that under Truss there would be “some fiscal easing” but that her administration would act in a “financially responsible manner”. Read more

When asked if he would become finance minister after Truss’ victory, Quarting told Reuters he did not know.

Truss faces a long, expensive and difficult to implement list that opposition MPs say is the result of 12 years of weak Conservative government. Several of them called for early elections — something that Truss said she would not allow.

Veteran Conservative MP David Davis described the challenges she will face as prime minister as “perhaps the second most difficult post-war brief for prime ministers” after Conservative Margaret Thatcher in 1979.

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“I actually don’t think any of the candidates, and none of them going through it, really know how big this is,” he said, adding that costs could run into tens of billions of pounds.

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 have to work hard to win over some of the MPs in her party who backed Sunak in the race. .

Her victory among party members was the narrowest of any Conservative leadership election held this century.

The Institute for Government, a think-tank, said Truss would have a weaker starting point than any of her predecessors, because she was not the most popular choice among her party’s lawmakers.

First, it will touch on the pressing issue of rising energy prices. Average annual household utility bills are expected to jump 80% in October to 3,549 pounds, before the forecast rises to 6,000 pounds in 2023, destroying personal finances.

Britain has lagged behind other major European countries in its bid to support consumer energy bills, which opposition lawmakers blame on a zombie government unable to act while the Conservatives ran a leadership contest. Read more

“We’ve heard more from the last prime minister about corporate tax cuts over the summer than we’ve heard about the cost of living crisis, the single most important thing affecting millions of families,” opposition Labor leader Keir Starmer said.

In May, the government put in place a £15 billion support package to help families with energy bills as part of its £37 billion cost of living support scheme.

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Italy has committed more than 52 billion euros ($51.75 billion) so far this year to help its people. In France, increases in electricity bills were capped at 4% and Germany said on Sunday it would spend at least 65 billion euros to protect consumers and businesses from rising inflation.

(1 dollar = 1.0049 euros)

(dollar = 0.8715 pounds)

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Reporting by the London Office; Editing by Frances Kerry and Emilia Sithole Mataris Angus McSwan and Frank Jack Daniel

Our criteria: Thomson Reuters Trust Principles.