Will UK’s Truss Overcome Resignation Pressure After Replacing Key Officials and Embracing Opposition?

Prime Minister Liz Truss of the United Kingdom
Photo by Reuters Yonhap News

[Asia Economy Reporter Jeong Hyunjin] UK Prime Minister Liz Truss, facing resignation pressure after withdrawing a large-scale tax cut plan, has pulled out the card of replacing the Chancellor of the Exchequer and is literally engaged in a ‘fight for survival.’ On the 17th (local time), Prime Minister Truss convened a cabinet meeting and sought to turn the tide by persuading Conservative Party members and restoring trust.

Jeremy Hunt, the new Chancellor who boarded the Truss administration as part of the ‘opposition faction,’ assessed that Prime Minister Truss bears some responsibility for the withdrawal of the tax cut plan but declared that the government would reduce spending and regain market confidence. The fate of Prime Minister Truss is expected to be determined by whether she can persuade Conservative Party members and how the market evaluates her.

According to the Guardian and BBC on the 16th, Prime Minister Truss is expected to move busily on the 17th to manage the situation with the cabinet and political circles. First, she will preside over a cabinet meeting on the evening of the 17th and discuss the UK’s medium-term fiscal plan to be announced on the 31st. Prime Minister Truss had preliminary discussions with Chancellor Hunt over the weekend regarding this. Chancellor Hunt plans to meet all Conservative MPs this week to gather opinions related to this matter.

Along with this, Prime Minister Truss will meet directly with Conservative MPs who are increasing pressure for her resignation to restore the collapsing support base within the party. Within the party, efforts are being made to persuade Conservative MPs to prevent the spread of resignation demands that are erupting, with some saying "the game is over." Currently, three Conservative MPs have publicly called for Prime Minister Truss’s resignation. Within the Conservative Party, former Chancellor Rishi Sunak, House Speaker Penny Mordaunt, and Defense Secretary Ben Wallace have begun to be mentioned as candidates for the next prime minister.

Major foreign media described Prime Minister Truss’s moves as ‘fighting for political survival.’ As a solution to the political difficulties following the withdrawal of the tax cut plan, on the 14th, she dismissed Kwasi Kwarteng, who was once her ‘comrade,’ and appointed Jeremy Hunt as the new Chancellor. By embracing Chancellor Hunt, who had supported her rival former Chancellor Sunak, she played a trump card to resolve the crisis. However, within Downing Street, this move was described as "a measure to buy time," with evaluations stating, "Jeremy is a good person, but trust in her (Prime Minister Truss) is below zero."

Jeremy Hunt, the new UK Chancellor of the Exchequer [Photo by Reuters]

Chancellor Hunt, who has emerged as a key figure influencing the political situation, reversed Prime Minister Truss’s previous statements by announcing, "some taxes will be raised and government spending will be cut," signaling a shift toward austerity. In an interview with the BBC on the same day, he said, "What I want to do is show the market, the world, and the people watching at home that we can properly allocate our tax and spending plans." He added that he would "require all government departments to find additional efficiency measures" and would not rule out any options, including postponing the introduction of the basic income tax rate cut plan by the Truss cabinet by one year.

In the interview, Chancellor Hunt addressed the ‘responsibility’ issue regarding Prime Minister Truss. While acknowledging that Truss still "bears responsibility" despite the withdrawal of the tax cut policy, he emphasized, "She listened and changed. She willingly did the hardest thing in politics, which is to change her attitude." He also urged Conservative MPs to support Prime Minister Truss, warning that "the worst would be another long-term power struggle."

Now, attention turns to the market. The fate of the cabinet could be influenced by how investors, observing the moves of Prime Minister Truss and Chancellor Hunt, act in the UK market after the opening on the 17th. It is also the first trading day after the Bank of England (BOE), the UK central bank, ended its emergency bond-buying program aimed at stabilizing the market on the 14th. Bloomberg reported, "Some investors who believe that Prime Minister Truss’s tax cut package could be reversed have caused the pound’s value to rise in Asian markets."

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