Overview of Liz Truss' Forthcoming Objectives
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Just one month into her tenure, Prime Minister Liz Truss’ approval ratings have plummeted. It is even worse than her predecessors- the height of Johnson’s Partygate scandal and the weeks before May’s resignation. This article summarises the key agendas (the economy, energy crisis) that Truss will desperately need to tackle (the sooner, the better).
UK Economy
Rising interest rates and uncertainty in the market are the UK economy’s present main concern. When the current Prime Minister Liz Truss was elected as the new leader of the nation, the people had high hopes for her to provide a pathway of light to navigate through this foggy winter.
However, it came as a shock when her ‘Growth Plan’ was released and incorporated in it was the Chancellor Kwasi Kwarteng’s controversial mini budget. From this, the pound collapsed 4% against the dollar (reaching an all-time low), bond yields surge, and the IMF responded with criticisms prompting Truss to U-turn on the 45p top rate tax cut. The desperateness of the situation was especially highlighted when the Bank of England intervened and bought up to £65bn worth of government debt, otherwise many pension funds “would have been left with negative net asset value”.
At her party’s conference in Birmingham, Truss claims she wants “to set a new course for our economy” by focussing on a “high growth, low tax economy”. While most can agree on a growing economy, it is the method of cutting taxes that is the biggest issue. To encourage expenditure during a period of high inflation, caused by external factors such as the Russo-Ukraine War, Truss is effectively adding oil to the already ablaze economy. It is a fire which the Bank of England has attempted to contain though tightening monetary policy taking a toll on consumer spending and businesses. Effectively, it would counter Truss’ goal of high growth.
The IMF’s latest World Economic Outlook expects the UK’s inflation to peak at 11% by the end of the year, the highest of all G7 countries. High inflation reduces one’s purchasing power and coupled with the rise in cost of living, households are under immense pressure to survive this coming winter.
Energy Crisis
In July, the government introduced a £37m Cost of Living Support package, within is the Energy Bills Support Scheme which gives households £400 energy bills grant to all households. Just last week, the National Grid said households and businesses might face outages, jolting comparisons to the 1970s. In response, cabinet minister Nadhim Zahawi has said winter blackouts are ‘extremely unlikely’, yet it is “only right that we plan for every scenario”.
Throughout the leadership contest, Truss has pushed for tax cuts to deal with the energy crisis which as aforementioned would prove to be an economic disaster. Her present solution extends across the channel by signing an EU energy partnership. The UK is preparing to sign a memorandum of understanding with the North Seas Energy Cooperation (NSEC) which focusses on green energy (constructing wind farms) and the Netherlands and Belgium are set to supply electricity through interconnectors to UK if there is a winter shortfall. Overall, the energy landscape is improving with the world adapting quickly through international recognition that Russia is the foe and nations will need to unite against Putin.
by Ke Thie Kiew