UK Prime Minister Liz Truss faces serious pressure to resign after failed budget

PUBLISHED: Mon, 17 Oct 2022 16:51:11 GMT
Hannah Ward-Glenton
CNBC
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Key Points
  • U.K. Prime Minister Liz Truss is facing calls to resign from within her own Conservative Party just six weeks after entering Downing Street.
  • Truss’ economic policies – and their reversals – have ricocheted through the finance world, leaving banks questioning the prime minister’s future.
PRAGUE, CZECH REPUBLIC – OCTOBER 06: British Prime Minister Liz Truss makes a press statement after a meeting of the European Political Community at Prague Castle on October 6, 2022 in Prague, Czech Republic. Leaders from around 44 countries are gathering on Thursday to launch a “European Political Community” aimed at boosting security and economic prosperity across the continent, with Russia the one major European power not invited. (Photo by Alastair Grant – Pool/Getty Images)

LONDON — U.K. Prime Minister Liz Truss is facing calls to resign from within her own Conservative Party just six weeks after entering Downing Street.

Truss and her former Finance Minister Kwasi Kwarteng announced a fiscal package – a so-called “mini-budget” – on Sept. 23. The measures triggered market turmoil, from a plunging pound to pension panic, and a rare public rebuke by the International Monetary Fund.

Piece by piece, the plans have been tweaked and trashed – including reversing plans to scrap an increase in corporation tax, axing plans to abolish the top income tax bracket, and shortening the energy guarantee, designed to subsidize consumer and business energy bills, from two years to just six months.

The latest plans were announced Monday by Jeremy Hunt, just three days into his tenure as finance minister. He’s the fourth person to fill the position since July.

Truss sacked Hunt’s predecessor on Friday, and now lawmakers from across the political spectrum are calling for her to follow him out the door.

Elected members of Truss’ own party are openly calling for her to quit, while up to 100 members of the party are believed to have submitted letters of no confidence in the prime minister, according to reports by the i newspaper.

Angela Richardson, Conservative MP for Guildford, said it was “no longer tenable” for Truss to remain as prime minister, speaking on Times Radio on Monday, while Jamie Wallis, Conservative MP for Bridgend, wrote to the prime minister telling her to resign.

“I ask you to stand down as Prime Minister as I believe you no longer hold the confidence of the country or the parliamentary party,” Wallis’ letter said. “It is the right thing to do to ensure the stability, security and prosperity of the people to whom we owe everything.”

Leader of the opposition Labour Party, Keir Starmer said via Twitter on Saturday, “The Tories no longer have a mandate from the British people.”

Labour has also called for Truss to face scrutiny from lawmakers after she took only four questions from reporters at a news conference on Friday.

“Liz Truss must at least take [questions] from MPs representing the families whose livelihoods she’s putting at risk,” Starmer said.

Polling from Opinium Research for the Trades Union Congress shows Labour is set for a landslide victory at the next election, according to The Guardian.

It isn’t just current members of parliament who are already calling time on Truss’ leadership.

Former Conservative Finance Minister George Osborne said the “most likely outcome is that she falls before Christmas,” speaking on “The Andrew Neil Show” on Channel 4 on Sunday.

Further instability lies ahead

Truss’ policies – and their reversals – have ricocheted through the finance world, leaving banks questioning the prime minister’s future.

“It is not easy to see how Truss – whose personal mandate is now in tatters – can continue as PM for long,” analysts at Berenberg Bank said.

“We would not be surprised if Conservative MPs pressure Truss to resign in [the] coming days. With more than two years to go until a general election needs to be held (January 2024), the Conservative Party may decide its best shot to stay in power is to quickly move on with a new leader,” analysts at Berenberg said.

Citi went further and questioned whether Truss’ party was capable of navigating and surviving the current economic crisis.

“The fundamental question here is whether any Conservative leader can offer credible economic direction. We are increasingly unsure,” an analysis note from the bank said.

“The implication is PM Truss now faces a squeeze between her Parliamentary party on the one hand and markets on the other … We believe further market instability likely lies ahead,” it said.

The Cabinet Office did not immediately respond to a request for comment.

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