The countdown ends and an announcement is made: Liz Truss scripts history to become the third female Prime Minister of the UK. She beat Indian-origin former chancellor Rishi Sunak to be named the winner of the Conservative Party leadership contest and will now go on to formally take charge as British Prime Minister as Boris Johnson’s successor.
But the leadership comes in no roses, there is a crown of thorns awaiting Truss as Britain is reeling amid a cost-of-living crisis and is amid its worst inflation.
Here are five challenges that Truss has to face as the next UK PM
Britain’s inflation is currently at a 40-year high, as rising food prices tightened a cost-of-living squeeze fuelled by soaring energy prices.
Most economists believe worse is to come. The Bank of England says soaring natural gas prices are likely to drive consumer price inflation to 13.3 per cent in October.
It says that will push Britain into a recession that is expected to last through 2023.
The average UK household fuel bill has risen more than 50 per cent this year, and another increase is due in October when the average bill is forecast to hit 3,500 pounds (USD 4,300) a year.
International Monetary Fund’s recent survey suggests that the UK is the worst hit by the energy crisis that is looming over Europe amid Russia cutting off the energy supply to the continent as a comeback for the West supporting Ukraine.
The UK relies heavily on gas – from heat, and electricity to household needs, and the UK has the least energy-efficient homes in western Europe. Putin’s invasion of Ukraine has sent gas prices soaring.
The IMF found that the average UK household is expected to lose 8.3% of its total spending power in 2022, as a result of having to pay higher energy bills, the Guardian reported. Energy bill rises also push up the costs of other goods, as sellers pass on the price rises. These indirect effects will knock another 2% off the money UK households have to spend in 2022. The IMF analysis takes account of people reducing their energy use as prices rise.
Liz Truss, in her campaign, said she wants to scrap all the regulations in UK law that are there as the legacy of our time in the EU by the end of next year, to “make the most of our newfound freedoms outside the EU”.
She took back her words in support of Brexit, amid the repruccusions that Britain is facing after the fallout from the EU.
Since Brexit, the country has been facing a severe labour shortage. 5.2% of those starting new jobs in adult social care were foreign nationals; now, that figure is less than 2%. In May 2021, the vacancy rate in adult social care was 5.9%. In April this year, it reached 10%, data quoted by the news agency showed.
Exports and imports will be about 15 per cent lower in the long run than they would have been if the United Kingdom stayed in the EU, the Office for Budget Responsibility has projected.
Britain has been witnessing flooding, heatwaves and frequent wildfires recently, and it is time for Truss to step up UK’s climate crisis game.
Climate is exacerbating conditions as hotter temperatures speed up evaporation, thirsty plants take in more moisture and reduced snowfall in the winter limits supplies of fresh water available for irrigation in the summer.
UK Centre for Ecology and Hydrology has also said that river flows will continue to be low across central, eastern and southern England until later in the year.
The record-breaking heatwave this year has spurred calls for the government to speed up efforts to adapt to a changing climate.
Depreciation pound value
The pound sank to its lowest level against the dollar since March 2020 as traders eyed a widening gulf between the Bank of England and Federal Reserve rate-hiking cycles, Bloomberg reported. The pound fell 0.3 per cent in early Monday trading in Asia to $1.1475, according to FactSet. That is the lowest since 1985.