Successor has ‘urgent task’ on hands as prime minister Liz Truss resigns

Prime minister and leader of the Conservatives Liz Truss yesterday (20 October 2022) announced her resignation after only 44 days in office – becoming the UK’s shortest serving prime minister.

In a statement delivered from outside 10 Downing Street yesterday, Truss said: “I came into office at a time of great economic and international instability, families and businesses were worried about how to pay their bills.”

She continued: “I recognise, 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 notify him that I am resigning as leader of the Conservative Party. This morning I met the chairman of the 1922 Committee Sir Graham Brady. We’ve agreed that there will be leadership election, to be completed within the next week.

“This will ensure that we remain on a path to deliver our fiscal plans and maintain our country’s economic stability and national security. I will remain as prime minister until a successor has been chosen. Thank you.”

Speaking exclusively to Insurance Times, Matthew Maxwell-Scott, executive director of the Association of Consumer Support Organisations (ACSO), said: “The new prime minister is going to have an urgent task on his or her hands, to restore some stability to the country and market after what has been a deeply unsettling few weeks.

“The problems with civil justice that Truss inherited very much remain – there’s court delays and serious challenges over access to justice.”

Largely rudderless 

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “First her policies went up in flames, then her brief career as prime minister.

“The great political gamble of Truss has spectacularly backfired, but not before wreaking significant damage to the UK economy. It will take considerable time before the risk premium attached to UK assets fades away, following the financial nervous breakdown which followed the mini budget.

“With a political implosion seemingly imminent and expectations rising that Liz Truss’ minutes in power were numbered, the pound crept up in value, heading back towards $1.13. As she gave her resignation statement, it largely held onto gains.

“Sterling is highly sensitive to economic policy uncertainty and even though the ship Britannia will still be left largely rudderless, with a successor still to be chosen, as far as investors are concerned, the future is marginally brighter without her in charge.

Truss explained that Putin’s illegal war in Ukraine had threatened the security of the country, leading it to be held back for too long by low economic growth.

“I was elected by the Conservative Party with a mandate to change this – we delivered in energy bills and cutting national insurance and we set out a vision for a low tax high growth economy that would take advantage of the freedoms of Brexit,” Truss said.

Streeter added: “Ten-year gilt yields eased further yesterday as speculation soared about her resignation – a sign of tacit approval from the bond vigilantes who punished the UK by deserting its government’s debt as worries raced up about fiscal responsibility.

”However, on the equity markets, news of Truss quitting was met with another bout of nervousness, as political uncertainty conspired with worries about the impact of recession.

“With the third prime minister in just a year expected to be announced by the end of the month, the UK will still be viewed in financial markets as politically unstable. What investors crave is more steadiness and reliability but until they know who will take charge and lead an economic recovery, that stability still remains highly elusive, which means that neither sterling nor stocks are likely to make any big strides of progress.’’

Housing crisis 

James Blakey, planning director at Moda Living, said: “The politics of recent weeks has been extraordinary, but let’s remain optimistic that we can draw a line under it and move forwards. The UK is in desperate need of a stable government and a prime minister who will focus proactively on addressing the housing crisis which is impacting on so many lives.

“Some 20% of all homes in the UK are rented and this is set to grow to as much as 50% of the residential market in the next 20 years. The lack of supply in overcrowded rental markets is only going to push rents higher in a time where people are struggling with the cost of living. It’s crucial the government get back on track to support the industry.”