United Kingdom

Truss resigns: What you need to know

Reuters

This is AI generated summarization, which may have errors. For context, always refer to the full article.

Truss resigns: What you need to know

OUTGOING PM. British Prime Minister Liz Truss announces her resignation, outside Number 10 Downing Street, London, Britain, on October 20, 2022.

Henry Nicholls/Reuters

Liz Truss will remain as Prime Minister until a successor has been chosen within a week

LONDON, United Kingdom – Liz Truss said on Thursday, October 20, she would resign as Britain’s prime minister just six weeks after she was appointed, brought down by her economic program that sent shockwaves through the markets and divided her Conservative Party.

She said she will remain as Prime Minister until a successor had been chosen within a week.

Following are latest events, comments and context:

Politics
  • The text of Truss’ resignation speech at Downing Street.
  • Truss said the Conservative party she heads would hold a leadership election to be completed within a week.
  • Truss’s resignation came after she lost her interior minister, Suella Braverman, less than a week after she fired her finance minister. Braverman cited “serious concerns” about the government.
Markets
  • Sterling rallied after Truss resigned. The .FTSE turned negative. Britain’s mid caps .FT jumped as much as 1%.
  • Investors reined in bets of a full percentage-point interest rate increase by the Bank of England next month, after a top official said it remained to be seen whether rates rise as sharply as the market has been expecting.
  • The biggest jump in food prices since 1980 pushed British inflation to 10.1% last month, matching a 40-year high hit in July in a new blow for households grappling with a cost-of-living crisis.
What’s behind the crisis?
  • 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.
  • The sell-off began after then-new finance minister Kwasi Kwarteng’s tax-cut announcement on September 23.
  • After firing Kwarteng, a close friend and ally, on Friday, October 21, Truss announced that corporation tax would rise to 25% as intended by her predecessor Boris Johnson, reversing her earlier plan to freeze it at 19%. Kwarteng’s cut to the highest rate of income tax had already been reversed.
  • His replacement Hunt on Monday, October 17, then scrapped “nearly all” of Truss and Kwarteng’s economic plan and scaled back her vast energy support scheme, announced in September, in a historic U-turn to try restore investor confidence.
  • The BoE interventions have highlighted a growing segment of Britain’s pensions sector – liability-driven investment.
  • LDI helps pension funds use derivatives to “match” assets and liabilities to avert risks of shortfalls in payouts, but the soaring interest rates have triggered emergency collateral calls for those funds to cover the derivatives.

Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI

How does this make you feel?

Loading
Download the Rappler App!