UK's 'Iron Lady' Revival Likely... Strong Financial Support Policy Announced

Next Prime Minister Vote Results Announced Today... Truss Foreign Minister Favored
If Elected, Third Female UK Prime Minister... Promises Corporate and Income Tax Cuts
China Warns "Focus on Domestic Issues" Amid Current Tough Stance on China

Liz Truss, UK Foreign Secretary

[Asia Economy Reporter Park Byung-hee, Beijing=Correspondent Kim Hyun-jung] On the 5th (local time), the United Kingdom is expected to see the birth of the third female prime minister in history, following Margaret Thatcher (1979?1990) and Theresa May (2016?2019). The ruling Conservative Party in the UK closed voting for the party leadership election among its members by the 2nd, and the results will be officially announced on the 5th. Throughout the election campaign, Foreign Secretary Liz Truss maintained support rates in the 60% range, nearly doubling the gap with former Chancellor Rishi Sunak, and is expected to become the 78th Prime Minister of the UK.

Truss, who is compared to the hardline conservative 'Iron Lady' Thatcher, faces a challenging and thorny path ahead. The UK economy is facing its worst crisis, with the central bank, the Bank of England (BOE), warning that it will experience a prolonged recession from the fourth quarter of this year through the end of next year. There are even forecasts that the UK will lose its position as the world's 5th largest GDP holder to India this year. The pound sterling, which has been warned to fall to an all-time low, plunged 5% against the dollar last month alone.

◆ "The Truss government will not be ashamed of being pro-growth" = During the campaign, Truss emphasized tax cuts to differentiate herself from former Chancellor Sunak. She criticized Sunak for pushing for corporate tax increases while emphasizing fiscal soundness during his tenure.

Truss pledged to reduce corporate and personal income taxes upon becoming prime minister. She also promised to reverse the 1.5 percentage point increase in the National Health Service (NHS) national contribution rate that Sunak raised in April this year to address the COVID-19 shock and expand social welfare support.

In an interview with the BBC on the 4th, Truss said she would announce measures to tackle soaring energy costs within a week of taking office. However, she did not disclose specific support details, citing the need for time to prepare concrete legislation.

Kwasi Kwarteng, the likely Chancellor of the Exchequer in the Truss government and current Secretary of State for Business, Energy and Industrial Strategy, contributed an article titled "The Truss government will not be ashamed of being pro-growth" to the Financial Times on the same day, signaling strong fiscal support policies.

Minister Kwarteng emphasized the need for decisive measures and fiscal easing to help households and businesses survive this winter. He argued that the UK's debt-to-GDP ratio is lower than that of the other six major G7 countries except Germany, so excessive fiscal tightening is unnecessary. He claimed that outdated and old-fashioned administrative control policies will become a legacy of the past alongside sluggish economic growth and stagnant productivity.

However, large-scale fiscal tightening could fuel the UK's inflation, which is already in double digits. The UK's inflation rate reached 10.1% in July, the highest among the G7, and Goldman Sachs predicted that inflation could rise to 22.4% by January next year.

YouGov Next UK Prime Minister Preference Poll Results

◆ China steps in with warnings: "Focus on domestic issues" = Friction is also expected in foreign relations. In particular, Truss is expected to maintain Boris Johnson's tough stance on China. China has already begun to issue warnings.

On the 5th, the Chinese state-run English media Global Times published an editorial titled "The new UK Prime Minister should not normalize a tough attitude toward China," sharply criticizing, "To become an 'Iron Lady,' one must recognize the trend of the times and change the rigid and outdated imperial spirit." This was a sarcastic remark on comparisons between Truss and former UK Prime Minister Margaret Thatcher.

The media further stated, "Rather than normalizing a tough stance toward China, more focus should be placed on domestic pragmatism," adding, "Playing geopolitical games may attract attention, but it will not solve the UK's internal problems."

Friction with Scotland, which is considering independence, also seems inevitable. According to the Sunday Times, Truss wants to enact a law banning a Scottish independence referendum until public opinion polls show that more than 60% of Scots support independence for at least one year. During the COVID-19 pandemic, support for Scottish independence reached a peak of 58%, so this effectively means a complete blockade of any independence referendum.

Nicola Sturgeon, head of the Scottish Government, expressed a willingness to cooperate initially, saying she would give Truss a chance despite their differences. However, she warned, "If Truss tries to fulfill her campaign promises, it will be a disaster not only for Scotland but for the entire UK."

Trade friction with the EU is another challenge Truss must address. The UK Foreign Office, led by Truss, caused friction with the EU in May by preparing legislation to nullify the Northern Ireland Protocol, which keeps Northern Ireland in the EU single market.

The Conservative Party will announce the next party leader and UK Prime Minister at 12:30 PM local time on the 5th. The next prime minister will officially take office on the 6th after formal appointment by the Queen of the United Kingdom.

This content was produced with the assistance of AI translation services.