Liz dress went down in history as a brief representative of UK. Only 45 days separated the beginning of the government and its definitive exit through the doors of N°10 Downing Street, the official residence of the British Prime Minister.
The rapid fall of Liz Truss is a renewed sign of the political and economic turmoil the UK has faced since 2016, when Brexit was approved in a referendum. Since then, David Cameron, Theresa May, Boris Johnson and, finally, Liz Truss have fallen.
Now under increasingly fragmented interests within the Conservative Party, they are turning to their supporters to choose a new prime minister to be announced next week. Among the names vying for the lead are Boris Johnson’s former Finance Minister Rishi Sunak and Mr. Boris Johnson.
Johnson’s return to power would be an extraordinary feat in British public life. The former prime minister, ousted by his supporters after leading scandals and causing political rifts, is rising in the Tories’ polls but is seen as a highly divisive figure.
On the opposition side, the Labor leader Keir Stamer It vows to continue to press public opinion to call for a general election later this year.
In principle, the next parliamentary elections will be held only in January 2025. For the process to move forward, Liz Truss must declare the dissolution of the House of Commons and ask Charles III for authorization for a new general election. However, the possibility of that happening is remote.
What is ‘Trussonomics’?
Liz Truss’ resignation follows six weeks of chaos in the British economy. The British Prime Minister’s campaign was based on a platform that combined tax cuts and increased public spending – through the issuance of public debt – as a formula to restart growth in the United Kingdom.
The details of the economic policy of the Truce are contained in a small budget drawn up by former Finance Minister Kwasi Quarteng. The plan set off a turbulent period for UK bond markets, set against the debt-financing tax cuts he introduced.
Liz Truss’ unorthodox formula for dealing with double-digit inflation and the pound sterling’s historic devaluation against the dollar has failed miserably. Truss and Quartet have not been able to curb inflation or reintroduce a path to sustainable growth for what is now the world’s fifth-largest economy.
According to the United Kingdom’s National Institute for Economic and Social Research, state debt embedded in ‘trusonomics’ can account for an 8% increase in the fiscal deficit (of UK GDP) even in the current financial year.
What lies ahead?
Truss’s policy was damaged with the rise of Jeremy Hunt to the post of Chancellor of the Exchequer.
As one of the first acts, Jeremy scrapped the whole “mini budget” structure.
According to Alex Lima, the chief strategist of Guido Investimentos, many cuts will have to be made: “It is necessary to cut around 13 billion pounds to keep the debt path at a sustainable level”. Another 36 billion should be provided to bring the country back on the debt track before this mini-budget is tabled,” he observed.
The problem for the next prime minister is that the expansion of these cuts hinges on a major political battle, as the tax cuts, particularly in the energy sector, have been met with popular approval.
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