“Queen Elizabeth was the very spirit of Great Britain ... She has been a personal inspiration to me and to many Britons; her devotion to duty is an example to us all,” the U.K.’s new Prime Minister Liz Truss said following Queen Elizabeth II’s death days ago. Truss had previously met the queen at Balmoral where she was asked to form a government.
The queen’s death at the age of 96 came at such a pivotal moment for the country and Tuss as it removes one of the U.K.’s few remaining pillars of stability, which will leave Truss to lead the government of a nation detached, politically polarized and economically stunted amid the post-Brexit era.
“As strong as the storm may be, I know that the British people are stronger,” Truss said in her first public comments, promising to shield Britons from the crippling impact of rising energy costs and to implement a “bold plan” to revive the economy. Truss became the prime minister after triumphing over former Chancellor of the Exchequer Rishi Sunak in a vote by some 160,000 members of the Conservative Party. She will be the country’s s third female prime minister, following Margaret Thatcher and Theresa May.
Truss takes over for Boris Johnson who reluctantly agreed to step aside after a succession of scandals prompted mass resignations from his government. She hopes to turn the page after the nonstop drama that characterized her predecessor’s three years in power at a momentous time as war has come to Europe, inflation is battering the British economy, and the U.K.’s messy divorce from the EU is dragging on with a dispute over the Irish border.
Truss is entering Downing Street during arguably the most difficult period of the Conservatives’ 12 years in office and will be facing a bulging in-tray like no other new prime minister in recent times. Her priority will be to tackle the deepening cost of living, energy crisis and unprecedented levels of inflation exacerbated by the war in Ukraine.
The inflation is expected to hit 13% this year and could go past 20% next year if soaring energy prices don't come down.
On its part, the investment bank Goldman Sachs predicts that unless energy prices fall, Britain’s annual inflation rate for 2022 will spiral to more than 22%. Besides, the July figures showed consumer prices were up 10.1% in the U.K., the sharpest hike in 40 years.
On the domestic front, real wage levels continue to fall and, from transport workers to barristers, strikes are becoming commonplace. Elsewhere, the fall-out from Brexit continues to rumble on in the form of supply disruption issues plus the ongoing friction relating to Northern Ireland’s borders.
This bad economic situation threatens to propel the nation into a severe winter of discontent unseen since the 1970s with the prospects of a damaging U.K. recession rising daily.
Truss presented herself in the election campaign as someone who would rather cut taxes than make transfers to citizens. "The way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts," she said last month.
Her tax cut plans, which would cost the government more than $34.53 billion, include a proposal to cut green levies on energy bills, which are designed to fund renewable energy projects. Besides, she wants to remove a planned increase in corporation tax and reverse other planned tax rises, including a payroll tax. She says these plans will be revealed in an "emergency budget," which she will announce before the end of September.
Although Truss argues that her tax cuts will stimulate U.K. growth opponents including several prominent members of her party say they could further fuel inflation.
On the other hand, Truss has openly questioned the policies of the U.K.'s main financial institutions, such as the Treasury and the Bank of England. "The Treasury has fantastic, very clever people working but there is definitely an orthodoxy," she told the Financial Times recently. "There is a focus on ... what I describe as abacus economics of making sure that tax and spend add up but not focusing enough on economic growth." She said that she will "take on" that orthodoxy although she has played down reports that she will seek to divide the Treasury into two separate departments, one dealing with the public finances and one dealing more specifically with the economy.
Having campaigned as a Remainer in the 2016 Brexit referendum but since evolved into a Brexiteer, Truss has been both confrontational and cooperative with Europe. Now, as prime minister, she will be at a crossroads with Europe over the situation in Northern Ireland.
Truss is a sponsor of a bill to allow ministers to violate the Northern Ireland Protocol, which imposes EU-mandated customs and border checks for goods shipped to Northern Ireland from the rest of the U.K. rather than on the border with the Republic of Ireland. She has already threatened to invoke Article 16 of the agreement, unilaterally suspending part of the protocol.
The EU, for its part, has rejected renegotiating the agreement, having already launched legal proceedings against London for failing to enforce EU rules. Brussels is also debating additional retaliatory measures such as lawsuits or fines – setting up a collision course with Truss.
With sky-high inflation and energy shortages dominating the political agenda at home, there may be strong incentives for Truss to increase anti-Brussels rhetoric for domestic political gain.
The U.K. is a leading supporter of Ukraine among European countries and will be essential to the future of Europe’s security. Which option Truss will choose with Europe is unclear; however, experts predict that Truss may tread a middle ground, hoping to park but not resolve the Northern Ireland issue or lean in on confrontation to score points at home and within her party.
Under Johnson, Britain left the EU, but the economic realities of Brexit are only beginning to set in as the country reworks its relationship with what remains its biggest trading partner.
Truss’ elevation also comes amid a war on Europe’s doorsteps and the conflict in Ukraine shows no signs of ending which has implications for both European security and for the economy in Britain. Truss promised to “ride out the storm” and face the multiple crises crippling the United Kingdom.
Pledging action in a matter of days on the energy crisis and putting cutting taxes and boosting growth top of her priories, she also accepted that the cherished National Health Service is buckling under pressure, pledging to restore that third rail of British public life.
"We have huge reserves of talents of energy and determination I am confident that together we can ride out the storm," she said. "We can rebuild our economy and we can become the modern, brilliant Britain that I know we can be."
The new leader also promised to "transform Britain into an aspiration nation with high paying jobs, safe streets, and where everyone everywhere has the opportunities, they deserve." Truss is battling now not just the difficult social and economic challenges, but also a rejuvenated Labor Party and the continuous Conservative party failures.
“Stability” and “continuity” are two words threaded through much that has been written and said since the news flashed across the world last Thursday that the queen had died. The new prime minister survived a hard and challenging leadership campaign; the question remains if she will fulfill the hopes of her nation for a brighter 2023 and be the savior of her party.
