ExplainerLiz Truss inherits UK economy heading for recession as new PM

Name: Liz Truss named Britain’s new Prime Minister and Conservative leader
Uploaded: 2022-09-05T04:18:17.000Z
Duration: 3 min 2 s
Description: Liz Truss named Britain’s new Prime Minister and Conservative leader

Britain’s Conservative party announced Liz Truss as its new leader to succeed Prime Minister Boris Johnson

She takes power at a time when the country faces a cost-of-living crisis, industrial unrest and a recession

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Liz Truss named Britain’s new Prime Minister and Conservative leader

Reuters

Published: 12:18pm, 5 Sep 2022Updated: 8:50pm, 5 Sep 2022

Britain’s next prime minister Liz Truss will face an economy that is forecast to go into a long recession later this year, with inflation at a 40-year high and limits on the options for getting growth going again.

Following is a summary of the key issues facing Truss, who won the keys to Downing Street on Monday by coming first in the race for the leadership of the Conservative Party.

Inflation

At 10.1 per cent in July, Britain had the highest rate of annual inflation among Group of Seven advanced economies. Forecasters expect inflation in Britain to climb higher with Goldman Sachs saying it could top 20 per cent if gas prices do not fall.

High dependency on imported gas and a fast-weakening currency explain much of the strength in British inflation.

The pound has fallen almost 8 per cent against the US dollar in the last three months alone – a worse performance than the euro or even the Japanese yen – making imports of energy priced in dollars even more expensive.