1. Liz Truss. The 45-day PM of UK has resigned on 20th October. Hers was an eventful tenure full of off-track reform proposals and rush rebuttals. Though the term of resignation is merely a humble word, she has literally been forced out of the office under the circumstances that somehow reflect that she was made a scapegoat.
2. The Deadline. It will be the Conservative Party that will decide upon the new PM. It can be by election or by internal selection with no competition. Party is in majority in the parliament of UK. No need to conduct elections.
3. The Candidates in Fray. The upcoming contest is likely to be among Rishi Sunak (an Indian origin Brit & ex Finance Minister) & Penny Mordount who is the ex Defense Minister of UK. Needless to say, that Boris Johnson may also be seen in the fray. Moreover, it is likely that the candidate will be selected by the internal voting. A threshold of 100 votes has to be passed by any candidate to be elected (in case only one candidate)
4. State of United Kingdom. As a nation state it has been quite volatile since the Brexit in 2016. It was a no deal Brexit. Had Britain been a part of European Union till now, the impact of war and that of the COVID would not have been that much. EU has handled these situations more practically. Further coming to the ongoing Energy crisis due to the war. The EU would be handling it more in group manner, however UK on the other hand is battling many other things apart from this. Other factors highlighting the UK economy are:-
- (a) Inflation. Skyrocketing gas prices. Maximum rise between Feb 2021 & August 2022.
- (b) Stagnant Economy. Post the recession of 2008, the British economy has been stagnant. The overgrowth of the GDP has been from 2.73 Trillion Dollars to 2.89 Trillion Dollars.
- (c) Min investment of GDP. Britain reinvests only 15-16% of the GDp back to the economy. This percentage is one of the lowest in the world.
5. The path to Resignation.
- (a) Over ambitious promises. Liz Truss in her election campaign had promised significant tax cuts. Will be funded by government borrowing and with de-regularization.
- (b) Turbulent times to sail. She took office during testing times. The country was worst hit by the ongoing war (reflected by the inflation faced by Britain). It was witnessing long running stagnation (Economic).
- (c) Mini Budget (too short a Budget). With the conscience pressure of reviving the economy she brought out the MINI BUDGET. It included the widespread tax cuts. Mr Kwasi Kwarteng presented the budget. Overall this step increased the spending along with tax cuts. This further led to increased government borrowings.
- (d) Psychology of Market. As brought out in a book review by www.medhinienergies.com on Psychology of Money, the market is nothing but a set of emotions. So, the sharp rise in borrowings along with bad economic state implied that govt would not be able to pay off the debt. This further led to massive withdrawals from the UK market. Investors sold all possible UK assets. Pound Sterling fell more in value and thus the inflation increased further.
- (e) Oh My God! Recession is here. This fear led to the selling of the government bonds and reduction in the government borrowings. Banks compensated it by rising the interest rates. Thus, making borrowing by citizens difficult.
- (f) Increase in the Mortgage Rates. The home loan interest rates are increasing. Borrowers are bearing the brunt . People with ongoing home loans had to either pay more EMI or they might lose the property. Potential buyers could no longer buy at the same rates.
- (g) Inflation Hammer with War Anvil. All this happened with the ongoing war in the backdrop of the event. Winters are coming. and energy security is at a distance.
- (h) Trussonomics. Opposition took advantage of the chaos. The made it a point to convey that this state was due to the flawed plans of the lady. People in despair now for someone to blame.
- (i) Reset Button. These allegations set in motion a set of reset button presses. She further started reversing her decisions. Liz Truss dropped the chancellor. This suspension – taken against her.
- (j) Hunt in Power – The newly appointed chancellor further made the situations worse (for Truss). He trashed the remains of the Trussonomics and thus it was seen that he was the man in the power.
6. Conclusion. Any new person taking a key position of responsibility in such times has important thigs to do at hand. Though Liz Truss is brave enough to be the captain in the turbulent times. But she was immature enough not to know her boat and fellow sailors. She made decisions that were in a hurry and obviously not well thought through. And further she is made scapegoat as the sword was swung. Somebody had to be hanged for the inflation, war, weakening energy security and for the Falling economy. And now with the same conditions others will prevail. All the above cited conditions will more or less remain the same. That’s the beauty of politics.