LONDON: Liz Truss will resign as British prime minister, brought down just six weeks into the job by an economic programme that roiled financial markets, pushed up living costs for voters and enraged much of her own party.
Following are latest events, comments and context:
Boris Johnson, Rishi Sunak lead race to become Britain’s next prime minister
Politics
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A leadership election will be completed within the next week to replace Truss, the shortest serving prime minister in British history. Sunak, Mourdan and former prime minister Johnson are among the likely candidates. The first results in the contest will be announced at 1700 GMT on Monday, the Conservative party said.
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French President Emmanuel Macron and Irish Prime Minister Micheal Martin voiced hope on Thursday that the next British leader would bring stability to the country after Truss resigned.
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The United States and Britain are enduring allies and their strong bond will last, US President Joe Biden said on Thursday after Truss announced her resignation.
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Boris Johnson is flying back to the UK this weekend, a journalist at the Daily Telegraph newspaper reported on Thursday. The Times newspaper had reported that Johnson was expected to stand in the race to replace Truss.
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Former finance minister Rishi Sunak is “certain to stand” in the contest to succeed Prime Minister Liz Truss, a reporter at the Telegraph newspaper said on Thursday citing sources.
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Residents in a traditional Conservative Party-voting area of Britain hailed Truss’ resignation, with one saying the state of the country was “an absolute disgrace” following her six weeks in office.
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Daniel Pryor, who lobbies for governments to shrink the state and cut taxes, feels Truss’s brief, disastrous spell as prime minister has killed off his dream of a low-tax, deregulated British economy for at least a generation.
Economy
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British shoppers reined in their spending in September while public borrowing grew by more than expected, underscoring the challenge facing new finance minister Jeremy Hunt and whoever succeeds Truss as prime minister.
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Hunt reiterated on Friday that the government will do “whatever is necessary” to drive down debt in the medium term. “To stabilise markets, I’ve been clear that protecting our public finances means difficult decisions lie ahead,” Hunt said.
Markets
- Sterling sank toward its lowest level in a week on Friday morning and the index of leading British shares fell as investors digested the news of Truss’ resignation.
What’s behind the crisis?
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Britain’s financial market were plunged into turmoil on Sept. 23 after then-new finance minister Kwasi Kwarteng announced billions of pounds of unfunded tax cuts.
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The Bank of England was forced into emergency bond-buying to stem a sharp sell-off in Britain’s 2.1 trillion pound ($2.3 trillion) government bond market that threatened to wreak havoc in the pension industry and increase recession risks.
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Kwarteng’s replacement Jeremy Hunt on Monday scrapped “nearly all” of the economic plan and scaled back Truss’s vast energy support scheme, announced in September, in a historic U-turn to try restore investor confidence.
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The BoE interventions have highlighted a growing segment of Britain’s pensions sector - liability-driven investment.
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