Truss vs Sunak: Challenges for the new UK PM

3 min read | September 05, 2022 01:02 AM PDT | By Abhishek Sharma

Truss vs Sunak: Challenges for the new UK PM — Image source: © Pcruciatti | Megapixl.com

Highlights:

UK is all set to get a new PM on Monday.

According to reports citing Conservative Party sources, Liz Truss is expected to be the winner.

It's just a few hours until the announcement of the new UK PM. For most, the money is on Liz Truss, who remained loyal to Boris Johnson and didn't step down as the foreign secretary during the mass resignations of cabinet ministers in July. As per reports, former chancellor Rishi Sunak, the other PM hopeful, appears to be behind in the leadership race.

Voting from the party members to choose a new leader closed on Friday, and the new PM is to be announced in the evening on Monday. The Queen will formally confirm the winner as Johnson's successor, and they will take up office on Tuesday.

During the past few weeks, Sunak and Truss focussed their campaign on the soaring bills, taking inflation to 40-year highs. However, both have different views on how they will tackle the current situation. While Truss has promised aggressive tax cuts, Sunak has claimed it'll only add to the problem. Truss' proposed responses would aggravate the situation and lead to an inflationary spiral, and the former chancellor has been stressing.

Challenges before the new PM

The new prime minister will inherit an economy going through a difficult phase. Inflation reached 10.1% in July and is expected to rise further. Some experts have warned that it'll hit as much as 18% by the end of this year.

Moreover, the Bank of England (BoE) is expecting the country to slip into recession later this year. It further believes that it may stay there for about five months. If that happens, it'll be the biggest financial crisis since 2008-09.

Inflation reached 10.1% in July

Image source: Visuals6x, Shutterstock.com

Both Truss and Sunak have promised relief to households struggling with the high energy bills. As per reports, there are even considerations of freezing the bills. Truss, predicted to win the leadership contest, has blamed the country's tax burden for the sluggish growth. She has also pledged £30 billion in tax cuts through an emergency Budget later in September.

Be it Sunak or Truss, the issue that'll define their initial weeks in office is the cost-of-living crisis. Truss has pledged that she'll take action from 'Day 1' to help with the bills. While there are no details on how she plans to do it, she has said she'll suspend the green levies on bills and reverse the rise in the National Insurance threshold recently announced by Sunak and Johnson.

The stakes are high, and the new leader's actions will not just decide the UK's future but also of the ruling party.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.