British Prime Minister Liz Truss announced her resignation on Thursday, a day after a second top minister was replaced and significant numbers of her Conservative lawmakers defied the government in parliament in a dramatic breakdown of unity and discipline.
Following are latest events, comments and context:
– Speaking to reporters outside 10 Downing Street on Thursday, Liz Truss said she would resign as prime minister, but would remain in the role until a new Conservative leader was selected next week. Earlier in the day, she met with the 1922 Committee of Conservative lawmakers, which sets the rules for selecting and changing the party’s leader.
– Conservative lawmaker Simon Hoare, in parliament for seven years, said Thursday and Friday were crunch days for the government.
– Transport Minister Anne-Marie Trevelyan sounded unsure when asked if Truss will fight the next election, saying “I think at the moment that is still the case,” when asked in an interview on Times Radio.
– Conservative lawmaker Sheryll Murray submitted a letter of no confidence in Truss.
– Truss has promised disciplinary action against Conservative lawmakers who abstained or failed to support her party in a vote about fracking amid a total breakdown of unity and discipline. More than 30 of her lawmakers abstained or failed to vote with the party, although some of those had permission to miss the vote.
– Trevelyan said she was shocked to hear reports claiming politicians in Prime Minister Liz Truss’s Conservatives were manhandled to force them to vote with the government.
– Truss has lost her interior minister, Suella Braverman, who quit on Wednesday, less than a week after she fired her finance minister. Braverman cited “serious concerns” about the government.
– 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 pound fell to one-week low vs euro and GBP/USD traded above 1.1200 with 1.1192-1.1240 in the Asian session range. 1.1186 was Wednesday’s three-day low.
– Worries over a deepening political crisis in the UK and rising interest rates globally kept London’s main stock indexes under pressure, with shares of homebuilders edging toward a multi-year low hit recently.
– The biggest jump in food prices since 1980 pushed British inflation to 10.1 per cent last month, matching a 40-year high hit in July in a new blow for households grappling with a cost-of-living crisis.
– British banks are bracing for a potential tax hit after a source said finance minister Jeremy Hunt was reviewing the current surcharge on bank profits.
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 (US$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 Sept. 23.
– After firing Kwarteng, a close friend and ally, on Friday, Truss announced that corporation tax would rise to 25 per cent as intended by her predecessor Boris Johnson, reversing her earlier plan to freeze it at 19 per cent. Kwarteng’s cut to the highest rate of income tax had already been reversed.
– His replacement Hunt on Monday 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.