Truss vows energy crisis action after becoming Britain’s new PM

SOURCE: REUTERS: Liz Truss took over as British prime minister on Tuesday, vowing immediate action to tackle one of the most daunting set of challenges for an incoming leader in post-War history led by soaring energy bills, a looming recession and industrial strife.

Truss, the fourth Conservative prime minister in six years, flew to the royal family’s Scottish home to be asked by Queen Elizabeth to form a government. She replaces Boris Johnson who was forced out after three tumultuous years in power.

“We now face severe global headwinds caused by Russia’s appalling war in Ukraine and the aftermath of COVID,” the 47-year-old former foreign secretary said outside her Downing Street office.

“I am confident that together we can ride out the storm. We can rebuild our economy, and we can become the modern brilliant Britain that I know we can be.”

Truss, who will later announce her government appointments, said she had three priorities: growing the economy through tax cuts, dealing with rising energy costs from this week, and ensuring people got the care they needed from the state-run National Health Service.

However, she inherits an economy in crisis, with inflation at double digits, the cost of energy soaring and the Bank of England warning of a lengthy recession by the end of this year. Already, workers across the economy have gone on strike.

Her plan to revive growth through tax cuts, while also potentially providing around 100 billion pounds ($116 billion) for energy, has rattled financial markets, prompting investors to dump the pound and government bonds in recent weeks.

Truss has also promised to scrap plans to increase corporation tax on big firms, and to reverse an increase in a payroll tax on workers and employers, designed to raise additional funding for health and social care, with the extra spending coming from general taxation.

British 30-year government bonds suffered their sharpest one-day fall since March 2020 when the COVID-19 pandemic caused turmoil in financial markets, as investors honed in on the extra borrowing Truss’s plans are likely to require.

Ten-year borrowing costs rose to their highest since 2011, but two-year yields fell, with economists noting that an energy price cap would stop inflation rising in the near term.

“I know that we have what it takes to tackle those challenges. Of course, it won’t be easy, but we can do it,” Truss said.

“I will take action this day and action every day to make it happen. United with our allies, we will stand up for freedom and democracy around the world of recognising that we can’t have security at home without having security abroad.” (REUTERS)

PHOTO: REUTERS