Liz Truss promised tax cuts after being voted in as the next British Prime Minister

  • Truss defeated former Finance Minister Sunak as the new Prime Minister
  • Boris Johnson will officially step down on Tuesday
  • New leader faces cost of living, energy price crisis

LONDON, Sept 5 (Reuters) – Liz Truss will be Britain’s next prime minister after winning the leadership race for the ruling Conservative Party on Monday, vowing to press ahead with promised tax cuts and measures to tackle a deep energy and cost-of-living crisis.

After weeks of bad-tempered and divisive leadership contests, Truss, now foreign secretary and favorite to win, defeated former finance minister Rishi Sunak in a vote of Conservative Party members, winning by 60,399 to 81,326 votes.

“I will deliver a bold plan to lower taxes and grow our economy,” Truss said after the decision was announced. “I will deliver on the energy crisis, I will deal with people’s energy bills, but I will also deal with the long-term problems we have with energy supply.” read more

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Truss takes over as the country faces a crisis in housing finance, industrial unrest, recession and war in a Europe where Britain has been Ukraine’s leading backer. He appeared to rule out another national election before 2024, when he promised to deliver a major victory for his party.

But in a sign of deep divisions in his party, his margin of victory was narrower than expected and the narrowest of any Conservative leadership election this century. Truce won with the support of less than 50% of members, with one in five abstentions.

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

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Truss will succeed Boris Johnson, who was forced to announce his resignation in July after months of scandals saw support for his administration erode and ministers leave to oust him.

Johnson will travel to Scotland to meet Queen Elizabeth on Tuesday to formally hand in his resignation. Truss would follow him and be asked by the king to form a government.

“I know he has the right plan to tackle the cost of living crisis, unite our party, unite and balance our country,” Johnson said on Twitter. “It’s time for all conservatives to back off 100 percent.”

The long-time front-runner to replace him will make Truss the Conservative Party’s fourth prime minister since the 2015 election. Since then Britain has lurched from crisis to crisis and now faces a long recession and inflation that hit double digits in July.

Within minutes of his victory, business leaders from the hospitality industry to the manufacturing and chemical industries called for relief from rising energy costs and tight labor markets.

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

He said during his presidential campaign that he would defy convention by repealing tax increases and cutting other taxes that some economists say will further fuel inflation.

That, and the Bank of England’s pledge to rebalance its currency while protecting its independence, prompted some investors to dump the pound and government bonds.

‘Fiscal Responsibility’

Kwasi Kwarteng, widely tipped to be his finance minister, sought to calm markets on Monday, saying in a Financial Times article that while there would be “some fiscal relaxation” under Truss, his administration would act “fiscally responsibly”. read more

Asked if he would become finance minister, Kwarteng told Reuters he did not know.

Truss faces a long, expensive and challenging to-do list, which the opposition says reflects 12 years of poor Conservative government. Many have called for an early election – something Truss has rejected.

Senior Conservative lawmaker David Davies described the challenges he faced as “the second toughest brief of post-war prime ministers” after Conservative Margaret Thatcher in 1979.

Truss has said he will appoint a strong cabinet, abandon what a source close to him called a “presidential style,” and win over some conservative lawmakers who supported Chung.

“It was closer than expected,” said Conservative MP Andrew Bridgen. “By the end of the week, we’ll have a new government and you’ll be surprised how this party can come together and come together.”

A weak starting point

However, the government think tank said Truss would have a weaker starting point than his predecessors because he was not his party’s first choice of lawmakers.

First on his list is rising energy prices, which are expected to increase average household bills by 80% to £3,549 in October and £6,000 in 2023.

Britain has lagged behind other major European countries in supporting its consumers, which the opposition blamed on a “zombie” government that was unable to function during the Conservative leadership race. read more

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“We heard more from the last prime minister about the cuts to corporation tax over the summer than we have about the cost of living crisis,” said opposition leader Keir Starmer.

Freezing the bills at this stage is an option now being explored. read more

While Truss praised Johnson for standing up to Russian President Vladimir Putin and how he was praised in Ukraine, the Kremlin warned that the countries’ already poor relations could worsen. read more

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Reporting by Kate Holden, William James, Alistair Smout, Sachin Ravikumar, Andrew MacAskill, Michael Holden, Farooq Sulaiman and Muwija M; Editing by Frances Kerry, Emilia Sithole-Madaris, Angus MacSwan, Frank Jack Daniel and Tomasz Janowski

Our Standards: Thomson Reuters Trust Principles.

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