Liz Truss’ resignation brings an embarrassing end to her catastrophic tenure at Downing Street, which seemed doomed since her main economic agenda sent markets into a panic and led to a drop in the value of the pound.
She won the support of Conservative members by promising low-tax, pro-growth policies — derided by her critics as a shift to a trickle-down economy — but within weeks of coming to power, she rejected the plans in a humiliating pivot, firing her manager. Finance Minister Kwasi Kwarteng and abandoning virtually the entire fiscal agenda in the wake of a market reaction.
This came after investors rejected an announcement by the Truss government in late September that it would cut taxes while increasing borrowing in a bid to produce faster growth, citing concerns the plan would raise inflation, as did the Bank of England. want to bring it down.
Fears about the sustainability of public debt also arose at a time of rapidly rising interest rates.
The pound fell to a record low against the US dollar as bond prices fell, lifting yields. This drove mortgage rates much higher and pushed some pension funds to the brink of default.
The Bank of England was forced to announce three separate interventions to prevent a full-scale collapse in the UK government bond market.
Meanwhile, Truss has failed to regain control of an increasingly mutinous Conservative Party, and his Home Secretary Suella Braverman launched a violent attack on his leadership after leaving office on Wednesday.
A final chaotic display saw Truss’s allies accused of mistreating lawmakers to force them to vote against banning fracking — the process that makes it possible to extract liquid and gaseous fuels from underground — on Wednesday night.
Source: CNN Brasil
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