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British Prime Minister Liz Truss has resigned after 45 days in office marked by turmoil, triggering the second Tory leadership election in four months. Ms. Truss said her successor would be elected by next week after a rebellion by Tory MPs forced her to quit.
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On Sept. 23, Truss’ chancellor, Kwasi Kwarteng, announced a so-called mini-budget that began a turbulent period for U.K. bond markets which balked at the debt-funded tax cuts he put forward. Most of the policies were reversed three weeks later by the second chancellor Jeremy Hunt. The pound was up 0.6% on the day against the dollar trading at $1.128. It remains at the level it was on Sept. 22, before Truss’ market-moving budget.
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Sir Graham Brady, the chairman of the 1922 committee of backbench Conservative MPs, said a new leader could be chosen by next Friday. Under party rules, leadership hopefuls will need to secure the support of 100 MPs in order to enter the contest – this means a maximum of three candidates can stand.
Why it matters
Liz Truss beat Rishi Sunak to become the leader of the Conservative Party following the resignation of Boris Johnson on July 7 however the resignation leaves the status of the Conservatives’ expected budget update on Oct. 31 uncertain. The UK markets have been in flux since the duo of Truss/Kwarteng took over, announced their budget, and subsequently u-turning after tanking the pound and bringing it to near parity vs the dollar. Investors will not be buoyed by another leadership campaign that sees yet another change at Number 10, with the possibility of an early general election not being ruled out.
