Record inflation fueled by soaring energy costs, spreading strikes, the context of the war in Ukraine: Liz Truss faces colossal challenges for her entry into Downing Street. Brought to power by members of the Conservative Party after a very right-wing campaign, she also inherited a party divided after twelve years in power. And time is running out for him until the next legislative elections scheduled for January 2025 at the latest. All the polls show at this stage that the Labor opposition would largely win. 20 minutes takes stock of the main issues awaiting it.
Cost of living, the burning issue
With inflation of 10.1% per year, the highest for forty years, which according to Goldman Sachs could soar to 22% if gas prices remain so high, purchasing power is shaping up to be the burning issue of the one who will succeed Boris Johnson in Downing Street. The bill for an average household will rise by 80% from October, to 3,549 pounds, and is expected to rise significantly by spring, and several studies warn of a “major humanitarian catastrophe” if the British cannot heat properly this winter.
Liz Truss, Minister of Foreign Affairs in the government of Boris Johnson, advocated throughout the campaign for tax cuts rather than direct aid, which she regularly described as “bandages”. Faced with popular anger, not to mention criticism from economists who believe that the tax cuts will have no impact on low-income households, she now promises immediate aid. Several media argue that it could go as far as freezing energy prices, as suggested by the Labor opposition.
However, it has not gone back on the promised tax relief: it intends in particular to go back on the increases adopted in social security contributions, on that of the business tax, and also wants to suspend the taxes on petrol intended to finance the energetic transition.
“Hell’s Winter”, the challenge of the new Iron Lady
After the summer of discontent, “prepare for winter from hell” recently headlined the daily Evening Standard. In a country threatened with recession, strikes to obtain wage increases, in the face of plummeting purchasing power, have notably affected trains, the metro, dockers, garbage collectors and even lawyers in recent months. office. Others are planned for September, sometimes feeding the comparison with the coming to power of Margaret Thatcher in 1979, an Iron Lady with whom Liz Truss looks after the resemblance.
Liz Truss was not the favorite of the Conservative MPs who would have preferred her rival, the former finance minister Rishi Sunak, considered more competent to manage the crisis. “The big question is whether she will succeed in convincing these MPs of the need to help people (…), and whether the Conservative MPs will grant her a honeymoon”, explains Anand Menon, political expert from King’s College in London.
Energy, the “fracking” technique
If Liz Truss says she wants to maintain the UK’s commitment to carbon neutrality by 2050, she believes there could be “a better way to achieve” this goal that “would not harm people and businesses”. The new British leader intends to increase investment in energy, and says she is in favor of the controversial technology of hydraulic fracturing, “fracking”, making it possible to extract oil and shale gas, where the local population is OK.
The minister wants to “release more energy, for example in the North Sea”, and has been criticized by environmental NGOs for suggesting that she will give out more drilling permits. On the nuclear side, it should support the strategy of the Johnson government, which has given the green light to the financing of the Sizewell C power plant project, carried by EDF, and wants to multiply small reactors.
Brexit or the thorny Northern Irish protocol
Liz Truss, a former “remainer” converted into an ardent “pro-Brexit”, is the architect of the law on the Northern Irish protocol supposed to override the agreement signed by London with the EU, and one of the main points of tension with Brussels. She promised to reverse all the laws inherited from the EU in order to “turbocharge growth” in Britain.
On the other hand, it is silent for the moment on possible solutions to remedy the lack of workers in the United Kingdom, where Europeans represented large contingents of employees before Brexit.
Financial regulation, the earthquake in the City
Liz Truss is considering a merger of the City’s regulators: the market policeman (FCA), the prudential regulatory authority (PRA) which regulates banks and depends on the central bank, and the payment systems regulator (PSR).
Criticizing the action of the Bank of England in the face of inflation, the third woman to access Downing Street also proposed to review the status of the Bank of England, whose independence dates from 1997. Its governor Andrew Bailey cautiously recalled that the financial credibility of the United Kingdom depends on the independence of its monetary institute.
Attitude of Boris Johnson, the great unknown
Succeeding Boris Johnson, who remains very popular with some conservatives who regret his forced resignation in July, will not be easy either. He is still a deputy, and has said nothing of his projects. Bojo “was a disruptive presence in the House (of MPs), when David Cameron and Theresa May were Prime Ministers”, recalls Pippa Catterall, professor of political science at the University of Westminster.
Boris Johnson called on the Conservatives on Sunday to come together and support her “with all their hearts”, while 52% of Britons believe that she will be a poor or very bad Prime Minister, according to a recent YouGov poll. Perceived as stiff, she has neither the charisma nor the oratorical skills of Boris Johnson. She also doesn’t have the very good connections he could have with the press, underlines Pippa Catterall, who also thinks that “the honeymoon could be short-lived”. Liz Truss, who is therefore expected at the turn, will face her first session of weekly questions in the House on Wednesday.
